Crypto mixers, which can obscure the data linking the user to certain transactions, are designed to maintain confidentiality. But it also creates a clear hub for all kinds of illegal activities. Therefore, governments and regulators have expressed concern over such protocols.
The UK’s National Crime Agency (NCA) is the latest call to regulate protocols that enable crypto mixing technology to users.
demand for stricter regulation
As per the latest report, the NCA said that mixers should be subject to rules that would authorize them to conduct certain provisions including Know Your Customer (KYC) and record audit trails of coins passing through its platform.
Gary Cathcart, head of financial investigation at the NCA, was quoted as saying,
“When it comes to crypto transactions, owner identities are already unclear, and the reality is that determining the balance of a wallet and its owner would require prying eyes to obtain additional, difficult information. “
The exec also said that the argument over privacy is “weak”.
Cathcart believes the stringent rules will provide users with “comfort” and help law enforcement obtain court orders approved by a judge for investigation purposes. He also said that the rules can provide clarity to authorities and help differentiate between coin mixers that are being used for privacy and to facilitate serious criminal activities such as ransomware attacks and international terrorism. He is going.
The NCA chief also pointed out that “exponential adoption of cryptocurrencies” could benefit criminal entities from coin mixers, even though the overall volume of crypto-related money laundering is small compared to the broader economy.
Are mixers illegal?
This is not the first time that regulatory bodies have expressed concern about the potential of coin mixers to promote criminal activity and sanction evasion. But the legality of bitcoin mixers depends on different jurisdictions. Even if the project is supposed to be decentralized, but producers retain substantial control over the application, compliance may still be required.
Although several popular “anonymous software providers”, including Tornado Cash, are excluded from FinCEN’s money transmitter regulations, crackdowns against these “privacy devices” continue.
In February 2021, then-US Deputy Assistant Attorney General Brian Benzakowski said, “obscure virtual currency transactions (via mixers) is a crime.” At the same time, US authorities arrested Roman Sterlingov, the Russian-Swedish founder of bitcoin tumbling service ‘Bitcoin Fog’. Larry Dean Harmon, the founder of another bitcoin mixer Helix, pleaded guilty to helping criminals commit $300 million.
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