- The US House of Representatives has proposed a bill aiming to impose a two-year ban on cryptocurrency mixers, which are often used for illicit financial activities.
- The bill, known as the US Blockchain Integrity Act, is led by Democratic representatives and seeks to promote transparency in the cryptocurrency sphere.
- Violations of the proposed ban could result in civil penalties of up to $100,000.
The US House of Representatives has proposed a bill to ban cryptocurrency mixers for two years, aiming to disrupt the flow of illicit funds and promote transparency in the cryptocurrency sector.
US Lawmakers Propose Ban on Crypto Mixers
Cryptocurrency mixers serve as a pool, enabling users to generate new addresses and withdraw funds without disclosing the connection between the depositor and withdrawal addresses. This poses a significant challenge for law enforcement agencies, hindering efforts to track fund origins and destinations. The proposed legislation aims to disrupt this by prohibiting financial institutions, cryptocurrency exchanges, and registered money service businesses from accepting funds processed through a mixer.
Penalties and Legislative Challenges
Violations of the proposed ban could result in civil penalties of up to $100,000. However, the bill faces political challenges, particularly within the Republican-majority House, where its passage remains uncertain. While Democrats advocate for the initiative as a necessary measure to combat illicit finance, Republicans express concerns about stifling innovation and the need for balanced regulatory oversight.
Crypto Mixers: A Tool for Bad Actors
The use of cryptocurrency mixers for illicit activities has been on the rise. For instance, the hacker responsible for the security breach at the Poloniex exchange last year used the Tornado Cash mixer to launder $3.4 million worth of Ethereum. A report from blockchain intelligence firm Chainalysis reveals a surge in the popularity of crypto mixers in 2022, with these services receiving more cryptocurrency than ever before. Illicit addresses accounted for 23% of the funds sent to mixers in 2023, a significant increase from 12% in 2021.
Conclusion
The proposed ban on cryptocurrency mixers by the US House of Representatives is a significant development in the ongoing efforts to regulate the cryptocurrency sector. While the bill faces political challenges, it underscores the growing concern over the use of cryptocurrency for illicit activities. Whether the ban will be effective in curbing these activities remains to be seen.
