- The notice of proposed rulemaking will be open for public comment for 90 days.
- The action follows the recent Israeli-Palestinian conflict.
The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) did just that suggested to designate crypto mixers as ‘concerning money laundering’.
The agency claimed that the proposed rule is an “important part” of its ongoing efforts to increase transparency in the crypto markets.
The notice of proposed rulemaking will be open for public comment for 90 days. Once the period is over, the agency will study all suggestions and bring forward the rule.
If FinCEN is successful in sanctioning cryptocurrency mixers as a whole, the Treasury Department would restrict US financial institutions from interacting with these tools.
The action follows the recent Israeli-Palestinian conflict.
The notice noted how “malicious actors” such as Hamas, Palestinian Islamic Jihad (PIJ) and the Democratic People’s Republic of Korea (DPRK) have used crypto mixers due to their anonymous nature.
The Treasury Department also highlighted that it has imposed similar sanctions on crypto mixers, Tornado Cash and Blender.io, in the past.
Terrorism financing through crypto activities
On October 18, the Treasury Department’s Office of Foreign Assets Control (OFAC). imposed sanctions against a Gaza-based virtual currency exchange, along with other Hamas operatives.
The Wall Street Journal (WSJ) reported last week that Hamas and PIJ have received up to $134 million in crypto since 2021, citing data from forensic firm Elliptic and a Tel Aviv software company BitOK.
Earlier this week, a group of more than 100 US lawmakers, led by Senator Elizabeth Warren, asked two senior Biden administration officials to explain their strategy to curb the use of crypto in terrorism.
Senator Warren, along with Senator Roger Marshall, also wrote an op-ed in the WSJ. The duo argued that decentralized finance (DeFi) companies should be subject to the same anti-money laundering regulations as banks.
Meanwhile, leading blockchain analytics company Chainalysis has done just that claimed it had seen “exaggerated statistics and flawed analysis” surrounding the use of crypto by terror groups.
It argued that, contrary to popular belief, the inherent transparency in blockchain technology makes crypto transactions traceable. Therefore, it is less suitable for financing terrorism among other illegal activities.