A new legislative proposal, the Blockchain Integrity Act, has been introduced in the United States House of Representatives, seeking to impose a two-year ban on cryptocurrency mixers. Spearheaded by Democratic congressperson Sean Casten along with co-sponsors including Representatives Bill Foster, Brad Sherman, and Emanuel Cleaver, the bill aims to curb the use of crypto mixers which can obscure the financial trails of cryptocurrency transactions. If passed, the bill would enforce strict penalties on financial institutions, cryptocurrency exchanges, and virtual asset service providers that handle funds associated with crypto mixers, with fines reaching up to $100,000 per violation.
The proposed ban on crypto mixers comes as part of a broader effort to regulate the anonymity that these services provide, which is often exploited for illicit financial activities such as money laundering, tax evasion, and funding terrorism. Representative Brad Sherman, known for his critical stance on cryptocurrencies, highlighted that the intent behind cryptocurrencies, reflected even in the name, suggests a form of ‘hidden money’ that could facilitate criminal activities. This legislative move is aligned with previous actions taken by U.S. regulatory bodies, such as the Treasury’s Office of Foreign Asset Control, which previously targeted the Tornado Cash mixer service by placing it on a sanctions list.
During the two-year ban period proposed by the bill, the Treasury Department is tasked with compiling a comprehensive report. This report will explore various aspects of crypto mixers, including estimating the percentage of transactions linked to illicit finance, assessing legitimate uses of these services, and the ability of law enforcement to track and prevent illegal transactions involving mixers. Additionally, the report will review regulatory approaches to mixers adopted in other jurisdictions, providing a basis for informed policymaking going forward.
The introduction of the Blockchain Integrity Act indicates a growing recognition of the complexities and risks associated with cryptocurrency transactions and the need for regulatory frameworks to keep pace with technological advancements. By temporarily banning crypto mixers and conducting thorough research, U.S. lawmakers aim to strike a balance between innovation in the financial sector and necessary regulatory measures to protect against financial crimes. This approach reflects an ongoing global trend toward stricter regulation of cryptocurrencies, as seen with recent anti-money laundering laws in the European Union targeting privacy-focused cryptocurrencies like Monero.
