The US Treasury Department is preparing to impose a comprehensive ban on tools that provide privacy for cryptocurrency transactions.
Andrea Gacki, Director of the Financial Crimes Enforcement Network (FinCEN), announced this week in Congress that the “mixer rule” has reached its final stages. The regulation, which uses PATRIOT Act powers to ban privacy-enhancing software and methods for cryptocurrency transactions, is now in its final stages.
The PATRIOT Act, enacted in 2001 after the September 11 attacks, gave the government broad oversight and investigative powers. Over the years, the law has tightened “know your customer” (KYC) and anti-money laundering (AML) frameworks in the financial system. Now, these powers are being extended to digital assets.
The “mixer rule” the Treasury is working on classifies not just cryptocurrency mixers but also numerous on-chain transactions that can provide privacy as a “primary money laundering concern.” These include:
- Combine or split funds from multiple wallets or accounts
- Splitting transactions into parts and transferring them on the chain
- Creating disposable wallets or addresses
- Swapping between cryptocurrencies
- Applying user-induced delays to transactions
Experts point out that these definitions are quite broad and could even lead to legitimate users being suspected of committing crimes. Citing the federal crime of breaking transactions into smaller pieces, known as “smurfing” in traditional finance, they suggest similar criminal liability could be extended to cryptocurrency.
Concurrent with FinCEN’s work, the Special Measures to Fight Modern Threats Act, previously considered dead in Congress, has been revived. Representative Zach Nunn confirmed that the bill is still being debated.
This regulation could give the Treasury Department the authority to ban all crypto transactions verified through foreign countries, exchanges, or even miners abroad, without requiring any public due process. Critics argue that such authority could lead to a complete withdrawal of US banks and crypto exchanges from global transactions, which is an “authoritarian approach.”
Cryptocurrency industry representatives believe that a complete ban on privacy software would disadvantage not only criminals but also individuals seeking protection from oppressive regimes. The direction the US will take on the final regulations will become clear in the coming weeks.
*This is not investment advice.
Source: https://en.bitcoinsistemi.com/most-people-are-unaware-but-a-major-threat-to-cryptocurrencies-may-be-looming-in-the-us/
