Farewell, Tornado Cash? Crypto mixers to be banned in the US

The head of the U.S. Financial Crimes Enforcement Network (FinCEN), Andrea Guckowski, told lawmakers that the so-called “stirring up rule” is now in its final stages. Using the powers granted by the PATRIOT Act, the anti-money laundering (AML) effort will also cover privacy-oriented tools that regulators believe undermine financial transparency. We are referring to the so-called cryptomixers, which are used by hackers to launder stolen cryptocurrencies. They are also used to finance terrorism. These services pass tokens through a huge number of transactions, thus covering up traces of origin.

In addition to traditional cryptocurrency mixers, the new rules may consider splitting transfers, wallet rotation, coin swapping, or delayed transactions as suspicious activity.

But there is a risk that this could criminalize normal user behavior, equating their actions to “smurfing,” where large sums are split into smaller transfers to avoid detection of their real origin.

At the same time, the US Congress is pushing forward the Special Measures to Combat Advanced Threats Act, which would give the Treasury Department even more power to block transactions conducted through foreign exchanges, miners, or validators. Opponents argue that these moves could force US banks and trading platforms to completely abandon global crypto activity.

It is expected that the final version of the new rules may be released in the next few weeks.

Interestingly, the in early 2025, the US District Court in Texas lifted sanctions against the famous crypto mixer Tornado Cashwhose activities were banned by the U.S. Treasury Department back in 2012.

Source: FinCEN