The U.S. House of Representatives has presented the “Blockchain Integrity Act,” a legislative proposal aimed at prohibiting cryptocurrency mixers for a period of two years. Spearheaded by five Democratic members of Congress, with Sean Casten taking the lead, the bill defines cryptocurrency mixers as platforms allowing users to generate new addresses and withdraw funds without disclosing the connection between the depositor and withdrawal addresses. Under this proposed legislation, financial institutions, including cryptocurrency exchanges and virtual asset service providers, would be temporarily barred from accepting funds routed through mixers or facilitating direct withdrawals to mixer addresses, with each violation carrying civil penalties of up to $100,000.
The bill outlines a two-year timeline during which the Treasury Department will compile a comprehensive report encompassing various aspects related to cryptocurrency mixers. This report is set to include an assessment of the percentage of mixer transactions linked to illicit finance, the lawful use of mixers, law enforcement's efficacy in tracking or impeding such transactions, and the regulatory strategies adopted towards mixers in other jurisdictions.
Among the bill's co-sponsors are Representatives Bill Foster, Brad Sherman, and Emmanuel Cleaver, with Casten citing Sherman's longstanding opposition to cryptocurrencies. Sherman has expressed concerns over the potential misuse of cryptocurrencies for illicit activities, labeling them as "hidden money." He highlighted that various groups, including terrorist organizations, sanctions evaders, tax evaders, and cybercriminals, utilize mixers to obscure their unlawful actions.
The United States has previously taken measures against cryptocurrency mixers, as evidenced by the Treasury Department’s Office of Foreign Assets Control's designation of addresses associated with Tornado Cash, effectively prohibiting U.S. citizens from utilizing the platform. This action, which survived legal scrutiny, came in response to allegations of money laundering, sanctions violations, and related crimes against the founders of the mixer company, who faced charges in both the United States and the Netherlands.
The global regulatory landscape concerning privacy-focused cryptocurrencies like Monero has also seen increased scrutiny, with the European Union implementing new anti-money laundering laws. These developments underscore a broader effort to address the potential risks associated with cryptocurrency mixers and enhance regulatory oversight within the digital asset space.
