US Government Proposes Monitoring Crypto Mixers
The Financial Crimes Enforcement Network (FinCEN) has put forth a new proposal under Section 311 of the USA PATRIOT Act, suggesting that financial institutions and agencies should be required to keep records and reports on transactions involving crypto mixers.
Crypto mixers like Tornado Cash aim to conceal the identities of users by mixing their tokens with others from various sources and then distributing them to the recipient through multiple addresses.
Although these transactions occur outside the US, FinCEN is concerned about the potential for foreign criminals to use mixers for illegal activities. Therefore, they believe that imposing additional reporting and recordkeeping requirements would help mitigate these risks.
Tornado Cash, the largest crypto mixer on Ethereum, was blacklisted by the US government in August 2022, and its creator was subsequently arrested. However, despite this, $77.35 million in assets still flowed through Tornado Cash within just a 30-day period, according to blockchain analytics firm Arkham Intelligence.
Hot Take: FinCEN Takes Action Against Crypto Mixers
The US government’s proposal to monitor crypto mixers reflects its growing concern about illicit activities facilitated by these services. By enforcing additional reporting and recordkeeping requirements, FinCEN aims to improve transparency and assist law enforcement in identifying criminals involved in illegal transactions. The recent blacklisting of Tornado Cash and the arrest of its creator demonstrate the government’s determination to crack down on crypto mixers. However, despite these actions, Tornado Cash remains highly active and continues to process significant amounts of assets. This highlights the challenges faced by regulators in effectively monitoring and controlling illicit activities in the crypto space.
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