US proposes designating bitcoin mixers as money-laundering hubs

FinCEN plans to designate cryptocurrency mixers as ‘money-laundering hubs’ that threaten national security.

This sanction would require services to provide special reporting on any financial transactions.

FinCEN estimates that the share of transactions of convertible virtual currencies processed by mixers and originating from likely illicit sources is increasing.

The United States is increasingly concerned about the use of digital currencies by cybercriminals and terrorists, including Hamas and the Palestinian Islamic Jihad.

Earlier, US lawmakers urged the Biden administration to take decisive action to curb illicit cryptocurrency activity, called for.

Senator Elizabeth Warren, a member of the Senate Banking Committee, subsequently published in The Wall Street Journal article arguing that DeFi companies ‘should comply with the same anti-money-laundering rules as banks’.

However, the motion faced opposition from Yaya Fanusi, AML director at the Crypto Council for Innovation.

‘Exchanges and other financial intermediaries are money-services businesses under the Bank Secrecy Act and are already required to register with FinCEN and report suspicious activity potentially indicative of crime,’ said Fanusi.

As Chainalysis analysts noted recently, when tallying terrorism-related cryptocurrency, many misclassify third-party funds that have passed through various financial services that interacted with criminals.

In May 2022, the U.S. Treasury added to the sanctions list the cryptocurrency mixer Blender.io and related Bitcoin and Ethereum addresses. The agency says the service helped launder funds stolen by North Korean hackers and was allegedly involved in ransomware attacks.

On August 8 of the same year, was placed under US sanctions on the Tornado Cash mixer for allegedly laundering more than $7 billion in cryptocurrencies. The service’s users included North Korea’s Lazarus Group.