Privacy coins at risk as Congressman introduces bill to ban interaction with crypto mixing protocols
- Blockchain Integrity Act would see financial services banned from processing mixer-related transactions for two years.
- Defaulters would be subject to civil penalty of $100,000.
- Privacy coins could take a hit if new bill is approved.
On Wednesday, US Congressman Sean Casten introduced the Blockchain Integrity Act in the US House of Representatives to temporarily ban financial institutions that interact with crypto mixing protocols. Following the announcement, privacy cryptocurrencies were down 2.4%.
Also read: Democrats to introduce bill targeting crypto mixing services
Casten targets crypto mixers with new bill
The Blockchain Integrity Act, co-sponsored by Reps. Bill Forster, Brad Sherman and Emmanuel Cleaver, aims to curtail the use of crypto mixing protocols.
Casten initially stated his intentions to introduce the bill in a House subcommittee hearing on Tuesday, where he called mixing protocols "money laundering channels."
If enacted, the bill would make it unlawful for financial institutions to process any incoming funds that have passed through a crypto mixer or outgoing funds being directly withdrawn to a mixing protocol for two years.
Read also: US intensifies battle against crypto privacy protocols following crackdown on Samourai Wallet
As Casten states, financial institutions include cryptocurrency exchanges, virtual asset service providers (VASPs), and other registered money service businesses (MSBs). According to the bill, each violation would attract a civil penalty of $100,000.
While the two-year ban is in effect, the bill mandates that the Secretary of the Treasury and other related entities carry out a study and make a report on the estimated percentage of mixing-related transactions connected to illicit financing. The report would also cover information about the legitimate use of mixers and the capacity of enforcement agencies to track and control funds that have passed through mixing protocols.
Also read: Tornado Cash developer Roman Storm’s motion to dismiss accusations rebuffed by US DOJ
Some have said that a Democratic bill at this time may not be approved in a Republican-majority House.
Meanwhile, crypto community members have expressed concerns that such a bill would negatively impact the growth of privacy coins. As a result, cryptocurrencies under the privacy category may experience a dump if the bill is approved.
Other privacy/mixing protocols, such as Tornado Cash and Samourai Wallet, have also faced harsh enforcement actions in the US.
The privacy coins category is down 2.4% on Wednesday, May 8.
Author
Michael Ebiekutan
FXStreet
With a deep passion for web3 technology, he's collaborated with industry-leading brands like Mara, ITAK, and FXStreet in delivering groundbreaking reports on web3's transformative potential across diverse sectors. In addi
