In an effort to enhance oversight in the burgeoning cryptocurrency market, Democratic representatives, led by Sean Casten, have introduced the US Blockchain Integrity Act. This proposed legislation aims to impose a two-year ban on cryptocurrency mixers, which are tools that complicate tracking by obfuscating the origins and destinations of digital funds.
The bill is spearheaded by Representative Sean Casten and supported by fellow Democrats, targeting financial institutions, cryptocurrency exchanges, and registered money service businesses that might engage with crypto mixers.
The US Blockchain Integrity Act seeks to prohibit the use of cryptocurrency mixers, which allow users to obscure their transaction trails by pooling and redistributing crypto funds to new addresses. The act proposes civil penalties up to $100,000 for violations, aiming to deter the facilitation of mixer-related transactions.
Introduced in April 2024, the bill is currently facing deliberation in Congress. During its proposed two-year ban, the Treasury Department would be required to assess mixer transactions, scrutinizing their roles in both illicit finance and legitimate uses.
This legislative action is taking place within the United States but has implications for the global cryptocurrency market due to the international nature of digital transactions and the decentralized platforms involved.
The motivation behind the act is to clamp down on the potential for money laundering and terrorist financing that mixers facilitate. By reducing the anonymity in cryptocurrency transactions, lawmakers aim to make it harder for bad actors to use digital currencies for unlawful purposes without stifling the overall innovation within the cryptocurrency sector.
If passed, the bill would enforce a ban on accepting funds processed through cryptocurrency mixers by key financial entities within the crypto space. It would also involve a comprehensive evaluation by the Treasury to provide a clearer picture of the implications of mixers on finance and security.
This legislative move comes amid growing concerns about the misuse of digital currencies, as evidenced by instances like the Poloniex hack, where stolen funds were laundered through the Tornado Cash mixer. The increase in mixer usage and its association with illicit activities underscore the urgency for regulatory measures proposed in the US Blockchain Integrity Act.
