FinCEN seeks tighter controls on crypto mixing services

The proposed rule mandates that regulated financial entities flag transactions suspected of involving crypto mixing, especially those with international implications

article-image

Ink Drop/Shutterstock modified by Blockworks

share

The US Treasury’s Financial Crimes Enforcement Network (FinCEN) is zeroing in on crypto transaction mixers. 

Released Thursday, FinCEN’s Notice of Proposed Rule Making (NPRM) brands crypto transaction mixing as a “primary money laundering concern.” 

The proposal would require regulated financial institutions to report transactions when there is reason to suspect involvement in transaction mixing, particularly concerning activities outside the US.

Mixing is a process that blends different streams of crypto transactions to obscure the original source, thereby making it more difficult to trace individual transactions.

While the proposed rule aims to bolster transparency and curb illicit financial flows, questions remain over its real-world efficacy, particularly given crypto’s inherently decentralized and pseudonymous nature.

The agency’s proposal is part of a broader Treasury offensive against mixing services that began in earnest last year.

Blender.io and Tornado Cash, platforms both implicated in North Korean money laundering activities by US authorities, have spurred regulatory efforts to curb their use.

Read more: Attorneys say DOJ’s Tornado Cash charges contradicted FinCEN guidance

“[Convertible virtual currency] mixing offers a critical service that allows players in the ransomware ecosystem, rogue state actors and other criminals to fund their unlawful activities and obfuscate the flow of ill-gotten gains,” FinCEN Director Andrea Gacki said.

That approach has angered members of the crypto ecosystem. Critics say the Treasury’s Office of Foreign Assets Control, in its fight to clamp down on illicit proceeds, went a step too far — eventually leading to the arrest of a developer and charges against Tornado Cash’s founders.

FinCEN argues its latest proposal aligns with ongoing efforts to counteract a spectrum of threats, from sanctions-dodging countries to groups like Hamas and Palestinian Islamic Jihad.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (3).png

Research

Pear Protocol has proven its market fit through its pair-trading infrastructure, sustaining consistent trading activity despite recent headwinds. Its strategic pivot toward Hyperliquid integration represents a major growth catalyst amid industry consolidation. While short-term token unlocks present challenges, current valuations and liquidity conditions may offer compelling opportunities for investors.

article-image

Memecoins, tech, and inflation have dominated the first half of the year

article-image

As the Trump administration continues to test Fed independence, markets are beginning to react

article-image

An Aave interest rate shock prompted over 475,000 validators to exit and pushed stETH into a prolonged depeg

article-image

While Roman Storm’s team is set to present its case, it’s not yet clear if the Tornado Cash founder will testify

article-image

A wireless network inspired by lost drones is now helping telco carriers reach your phone indoors

article-image

The ETH products have notched $3.6 billion of net inflows from July 1 to July 22, Farside Investors data shows