U.S. Treasury Official Denies Attempt to Ban Cryptocurrency Mixing Services

In a surprising turn of events, the U.S. Department of the Treasury has clarified that they are not seeking to ban cryptocurrency mixing services, despite recent proposals and enforcement actions that have raised concerns in the industry.

Speaking at CoinDesk’s Consensus conference in Austin, Brian Nelson, the Treasury’s Under Secretary for Terrorism and Financial Intelligence, addressed the controversy surrounding FinCEN’s proposal to classify mixers as a “primary money laundering concern.” This proposal would require virtual asset service providers to report any crypto transactions involving mixing to the agency.

While many in the industry feared a potential ban on crypto mixing in the U.S., Nelson emphasized that the proposed rule is actually aimed at increasing transparency rather than outright prohibition. He acknowledged the importance of financial privacy for crypto users but stressed the need to prevent illicit activities such as terrorist financing.

Nelson expressed a willingness to collaborate with the industry to develop tools that can enhance privacy without compromising security. He highlighted the distinction between services that genuinely enhance privacy and those that are used to evade AML and KYC regulations, making them attractive to bad actors like North Korea.

Ultimately, Nelson emphasized the importance of ensuring that transactions are not inadvertently funding illegal activities, while still respecting the need for privacy in the crypto space. The Treasury’s stance on cryptocurrency mixing services appears to be focused on striking a balance between privacy and security in the digital asset ecosystem.