US Lawmakers Submit Bill to Suspend Crypto Mixer Transactions

US lawmakers have proposed a new bill aimed at temporarily blocking financial institutions from engaging in transactions involving funds cleared through crypto mixers.

Congressman Sean Casten (IL-06) introduced the bill on May 7 and received support from Representatives Bill Foster, Brad Sherman and Emmanuel Cleaver.

Blockchain Integrity Act

The proposed legislation, dubbed the Blockchain Integrity Act, aims to impose a two-year moratorium on financial institutions such as crypto exchanges, virtual asset service providers (VASPs), and other registered money services businesses (MSBs) on accepting incoming funds routed through a mixer. The aim is also to prevent outgoing funds from being withdrawn directly to a known mixer address.

During this period, the bill directs the Treasury Department, the SEC, the CFTC, and the DOJ to conduct a comprehensive study of digital asset mixers, privacy coins, and anonymity enhancing technologies. This study includes analyzing statistics on their illegal use, providing insights into legitimate applications, and developing tailored legislative proposals to combat illegal activities by specific perpetrators.

A crypto mixer is a service designed to “mix” different crypto funds with others in order to disguise their origin. This usually involves pooling source funds from different sources over a longer, random period of time before they are redistributed to target addresses.

Congressman Casten argued that digital asset mixers should be treated as potential money laundering tools unless they are subject to strict scrutiny. He claimed that digital assets have been used to finance terrorist activities worldwide in recent years, adding:

“A temporary ban while we study this technology will help us better understand how it is used for illicit purposes, prevent future crypto-financed terrorism, and influence future policy decisions.”

Similarly, Congressman Foster emphasized that mixers enable malicious actors to commit financial crimes that undermine U.S. security. Meanwhile, Congressman Sherman pointed out that mixers help achieve cryptocurrency’s goal of enabling covert transactions.

Notably, this bill comes amid heightened scrutiny of mixers by U.S. authorities, alleging that these privacy-enhancing services facilitate illicit financial activities.