The National Crime Agency (NCA) of the United Kingdom is the latest to advocate for the regulation of protocols that allow users to use crypto mixing technology. According to the NCA’s recent study, the mixers should be bound to rules that would allow them to execute specific procedures, such as know-your-customer (KYC), and keep track of the coins going through their platforms’ audit trails.
The NCA’s head of financial investigations, Gary Cathcart, stated:
“When it comes to crypto transactions, the owner’s identity is already masked, and the fact is that prying eyes would require additional, difficult-to-come-by information to figure out a wallet’s balance and owner.”
Cathcart argues that strict standards would provide “comfort” to consumers while also assisting law enforcement in obtaining judge-approved court orders for investigations. He also believes that legislation might help authorities distinguish between coin mixers used for privacy and those used to facilitate severe criminal activities such as ransomware attacks and international terrorism.
Even while the overall volume of crypto-related money laundering is modest compared to the broader economy, the NCA chairman noted that “the exponential growth of cryptocurrencies” may prompt criminal groups to use coin mixers. This isn’t the first time that regulators have raised the alarm about the potential for currency mixers to support illegal activity and sanctions evasion. However, the legality of Bitcoin mixers varies by jurisdiction. Compliance may be required even if the project is considered decentralised but the developers maintain sufficient control over the programme.
Despite the fact that several prominent “anonymizing software providers,” such as Tornado Cash, have been exempt from FinCEN’s money transmitter restrictions, the attack on these “privacy tools” continues.
It’s a wrap for this story.
Read more: UK financial authority initiates a probe into 50 unlicensed cryptocurrency businesses
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