U.S. House Proposes Two-Year Ban on Cryptocurrency Mixers with the Blockchain Integrity Act
Summary:
The U.S. House of Representatives is considering the Blockchain Integrity Act, proposed by five Democratic congresspeople, which aims to ban cryptocurrency mixers for two years. The bill would stop financial institutions from accepting funds linked to mixers, with violations resulting in substantial penalties. The proposal also mandates that the Treasury Department compile a report during this time focusing on the illicit and legal uses of mixers. Representatives Bill Foster, Brad Sherman, and Emanuel Cleaver co-sponsor the bill.
A legislative proposal targeting cryptocurrency mixers has been brought forth in the U.S. House of Representatives. Proposed by five Democratic congressmen, headed up by Sean Casten, the Blockchain Integrity Act seeks to effect a two-year ban on such mixers. Through a public statement, Casten characterised a cryptocurrency mixer as an anonymising service enabling users to reset their addresses and withdraw funds without exposing the link between the originating and recipient addresses.
The proposed law would mandate a temporary halt to accepting funds that have been transferred via a mixer by financial institutions. This encompasses cryptocurrency exchanges, virtual asset service providers and any registered money services businesses. Direct withdrawals to mixer addresses would also be prevented. Any infractions could result in civil penalties amounting to a maximum of $100,000.
In the proposed two-year window, the Treasury Department would undertake the compilation of a comprehensive report. This report would provide an estimate of illicit financial activities associated with transactions through mixers, along with legitimate uses, the abilities of law enforcement to track and inhibit such transactions, and the ways these mixers have been regulated in other jurisdictions.
The proposed legislation has received support in the form of co-sponsorship from Representatives Bill Foster, Brad Sherman, and Emanuel Cleaver, but is yet to be assigned to a committee. In support of the bill, Sherman, a known critic of cryptocurrencies, was quoted by Casten stating that the very designation 'cryptocurrency' tells you it's designed to be secret money. Terrorist groups, sanctions dodgers, tax evaders and cybercriminals all employ these mixers to mask their illicit activities.
The U.S. has acted against cryptocurrency mixers in the past. In 2022, the Treasury Department's Office of Foreign Asset Control blacklisted addresses associated with Tornado Cash, a mixer. This act, which effectively prohibited U.S. citizens from using it, remained effective despite a court challenge one year later. The business's founders have since been charged with money laundering, sanctions breaches and similar offences in both the United States and the Netherlands.
Additionally, the digital currency mixer Monero has undergone scrutiny following the introduction of anti-money laundering legislation by the European Union.
Published At
5/8/2024 9:00:00 PM
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