- United States policy makers are pushing for stronger regulations in the crypto mixer sector.
- The DOJ has recently commenced enforcement actions against the sector.
- The lawmakers have raised concerns over the Tether stablecoin.
Recent months have seen regulatory actions focused on the crypto mixing sector by United States authorities, marked by sanctions against service providers and increased alarm on their activities. The increasing enforcement has seen the Justice Department clamp down on two notable mixers, Tornado Cash and Samourai Wallet, alleging the facilitation of illegal financial transactions.
Taking the enforcement actions a step further, four lawmakers have proposed a bill to clamp down on the section.
Crypto Mixers Face Sanctions
During a House hearing on May 7, US Representative Sean Casten introduced the Blockchain Integrity Act, an upcoming regulatory framework targeting the crypto mixing sector.
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Co-signed by three additional democrats, Brad Sherman, Bill Foster, and Emanuel Cleaver, the Blockchain Integrity Act will address concerns associated with mixers to mitigate their roles in facilitating illicit transactions for sanctioned individuals.
By imposing a two-year ban that prohibits financial institutions, including crypto exchanges, from transacting with funds that have gone through digital asset mixers, the act will allow regulatory watchdogs such as the SEC and DoJ to investigate the illicit activities associated with the sector.
According to Casten, mixers are key to allowing illicit actors to instantaneously move massive amounts of money around the globe for criminal purposes without detection.”
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The presumption should be that these are money laundering channels,” stated Casten, adding "Let's go through and get that cleaned up and fixed," he stated during the hearing.
Congressman Sherman added that the legislation is a vital first step in banning crypto mixers in the United States, aiding the litigation of the sector’s dangers.
Crypto mixers are not the only flagged sources of concern among the Democrats.
Tether is a ‘Tool for Terrorism’
According to Rep Casten, the Tether (USDT), stablecoin has been at the core of terror financing over the past years and has evolved into a killer app for criminals.
Casten emphasized that USDT’s place in funding was machines for countries such as Russia, adding that it was the favored choice for the majority of the crypto assets adopted by the terrorist troop Hamas.
In response to the Democrat, former SEC official John Reed Stark asserted the lack of transparency regarding Tether’s auditing, stating that it fails to declare whether its offerings are backed by real securities openly.
“Tether claims to have some sort of audit, but it’s essentially a satellite snapshot of days of its events,” stated Clark.
The representatives stressed the need for stringent anti-money laundering measures in stablecoin regulations and emphasized the SEC’s role in protecting investors through enforcement actions.
On the Flipside
- The Department of Justice is locked in legal battles with bitcoin mixers Tornado Cash and Samourai Wallet.
- On May 7, privacy coin LocalMonero announced its suspension of operations, raising speculation that it has succumbed to the mounting regulatory pressure on the mixing sector.
- The FBI recently issued a warning to American investors, cautioning against the use of non-compliant service providers.
Why This Matters
The ongoing enforcement actions against crypto mixers reflect the tightening regulatory standards against the crypto industry, which could significantly impact service providers and investors.
Read more about this crypto mixer’s response to the mounting regulatory pressure:
Wasabi Wallet Exits Mixing Sector as DOJ Pressure Piles on
Here’s how policymakers are opposing the crypto industry, read more:
“Crypto Is A Garden of Snakes:” Rep Sherman Backs SEC Action
