A proposal has been submitted to the United States House of Representatives to impose a two-year ban on cryptocurrency mixers. The bill, known as the Blockchain Integrity Act, is sponsored by a group of five Democratic congresspeople, led by Sean Casten.
In a statement, Casten defined a crypto mixer as a platform that enables users to create a new address and withdraw their funds without revealing the connection between the depositor and withdrawal addresses.
If passed, the bill would temporarily prohibit financial institutions, including cryptocurrency exchanges, virtual asset service providers, and any other registered money service businesses, from accepting funds that have undergone mixing or allowing funds to be withdrawn directly to a mixer address. Each violation would incur a civil penalty of up to $100,000.
During the two-year period, the Treasury Department would compile a comprehensive report that includes various information. This report would cover the estimated percentage of mixer transactions involving illicit finance, legitimate uses of mixers, law enforcement’s ability to track or prevent transactions, and the regulatory approaches to mixers taken by other jurisdictions.
Representatives Bill Foster, Brad Sherman, and Emanuel Cleaver are co-sponsors of the bill, which has yet to be reviewed by the committee. Sherman, who has a history of opposing cryptocurrencies, was quoted by Casten as saying:
“The United States has previously taken action against crypto mixers. In August 2022, the Treasury’s Office of Foreign Asset Control added addresses associated with the mixer Tornado Cash to its list of Specially Designated Nationals, effectively prohibiting U.S. citizens from using it. This decision withstood a court challenge a year later. The founders of that mixer have been charged with money laundering, sanctions violations, and related crimes in the U.S. and the Netherlands.”
In addition to the proposed ban on mixers, privacy-focused cryptocurrency Monero (XMR) has faced increased scrutiny following the introduction of new Anti-Money Laundering laws by the European Union.
Overall, the bill aims to regulate and monitor the use of cryptocurrency mixers in order to maintain the integrity of the blockchain system and prevent illicit financial activities.