US Treasury Unit Proposes Increased Scrutiny of Crypto Mixers, Reports Reuters

Title: U.S. Treasury Proposes Rules to Increase Transparency Around Cryptocurrency Mixers

By Hannah Lang

The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has put forward a proposal aimed at enhancing transparency concerning cryptocurrency "mixers." This move is part of an effort to combat the use of these tools by organizations such as the Palestinian militant group Hamas.

If the proposal is finalized, it will obligate financial institutions to report any transactions they suspect involve crypto mixers—software applications that anonymize the source or ownership of digital assets.

This initiative reflects growing concerns among U.S. officials about the use of cryptocurrencies in financing groups classified as "terrorist organizations" by the U.S. government. These concerns were heightened following Hamas’ recent attacks in Israel.

Background:

• The cryptocurrency sector has long promoted digital assets as means for anonymous transactions. However, regulatory scrutiny has intensified with numerous federal enforcement actions against the industry.
• Hamas reportedly employs a global network to secure funding through charities and allied nations, which includes the use of cryptocurrencies.
• Recently, the Biden administration imposed sanctions aimed at disrupting Hamas’ funding streams, including targeting a cryptocurrency exchange based in Gaza. Additionally, U.S. lawmakers have urged the administration to act quickly against the use of cryptocurrencies for evading sanctions and supporting groups such as Hamas and Hezbollah.
• Last year, the U.S. also sanctioned crypto mixers Tornado Cash and Blender.

In a statement, Deputy Treasury Secretary Wally Adeyemo emphasized, "Today’s action underscores Treasury’s commitment to combating the exploitation of Convertible Virtual Currency mixing by a broad range of illicit actors, including state-affiliated cyber actors, cyber criminals, and terrorist groups."