US Treasury unit proposes stepping up scrutiny of crypto mixers

The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) on Thursday proposed increasing transparency around cryptocurrency "mixers" to combat the use of the tool by groups like the Palestinian militant group Hamas.

If finalized, the rule would require financial firms to report information about transactions that they suspect involve crypto mixers, which are anonymized software tools that allow users to conceal the source or owner of digital assets.

THE TAKE


FinCEN's proposal underscores increasing concern among U.S. officials about the role of crypto in financing those deemed as "terrorist groups" by the U.S. government, an issue thrust into the spotlight by Hamas' deadly attack in Israel this month.

CONTEXT

* The crypto community has long touted digital assets as vehicles for anonymous transactions, but regulators have cracked down on the industry with a slew of federal enforcement actions.

* Hamas uses a global financing network to funnel support from charities and friendly nations, including by using cryptocurrencies, Reuters reported on Monday.

* On Wednesday, the Biden administration issued sanctions to disrupt Hamas' funding, which included a Gaza-based crypto exchange. U.S lawmakers also urged the White House to swiftly crack down on the use of cryptocurrencies to evade sanctions and fund the operations of groups like Hamas and Hezbollah.

* The U.S. last year imposed sanctions on crypto mixers Tornado Cash and Blender.

KEY QUOTE

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