US Government To Bring PATRIOT Act to Digital Assets
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TL;DR:
The Financial Crimes Enforcement Network (FinCEN) revealed that the US Treasury is finalizing a ban on privacy tools, specifically private cryptocurrency transactions, by expanding the PATRIOT Act to digital assets.
https://www.therage.co/us-government-to-bring-patriot-act-to-digital-assets/
FinCEN Director Andrea Gacki confirmed that the Treasury is working on finalizing the so-called mixer rule, which uses the PATRIOT Act to prohibit private transactions in cryptocurrency.
We are seeing more and more illegal transactions being done in crypto,” Representative Liccardo claimed in the hearing, citing a study which found that out of 111 examined fraud cases, 91% allegedly involved so-called decentralized finance, or 'DeFi'. The concern here, according to Liccardo, arises from the pseudonymity of transactions.
While Gacki stated that FinCEN was working with blockchain analysis companies to deanonymize pseudonymous transactions, Liccardo countered that software like mixers would allow users to evade even sophisticated detection techniques.
What is the "Mixer Rule"?
The Treasury's mixer rule is not so much a mixer rule rather than a blanket ban on any software and even behavior that would grant users of public blockchains transactional privacy.
Notably, the mixer rule's suggestions on cryptocurrency swaps, transaction delays, "splitting," and the creation of single-use addresses, wallets, and accounts, would even put users under suspicion with the authorities, potentially ending in criminal liability – similar to how transaction structuring, sometimes also known as "smurfing," is deemed a federal crime in traditional finance, referring to the intentional breakup of transactions to fall below the $10,000 currency transaction reporting requirement.
In traditional finance, smurfing carries a federal prison sentence of up to 5 years, even if the money transferred did not stem from illicit origins.
Banning All Cryptocurrency Transactions for non-US Jurisdictions
The Special Measures to Fight Modern Threats Act, originally introduced in 2022 by Representative Himes of Connecticut as part of the COMPETES Act, would effectively grant the Treasury the power to ban any type of transaction it deems a concern without public notice or input under PATRIOT Act authority.
"one likely scenario is that the Treasury would use this authority to prohibit U.S. banks from being involved with cryptocurrency transactions validated by miners located outside of the United States."
-
TL;DR:
The Financial Crimes Enforcement Network (FinCEN) revealed that the US Treasury is finalizing a ban on privacy tools, specifically private cryptocurrency transactions, by expanding the PATRIOT Act to digital assets.
https://www.therage.co/us-government-to-bring-patriot-act-to-digital-assets/
FinCEN Director Andrea Gacki confirmed that the Treasury is working on finalizing the so-called mixer rule, which uses the PATRIOT Act to prohibit private transactions in cryptocurrency.
We are seeing more and more illegal transactions being done in crypto,” Representative Liccardo claimed in the hearing, citing a study which found that out of 111 examined fraud cases, 91% allegedly involved so-called decentralized finance, or 'DeFi'. The concern here, according to Liccardo, arises from the pseudonymity of transactions.
While Gacki stated that FinCEN was working with blockchain analysis companies to deanonymize pseudonymous transactions, Liccardo countered that software like mixers would allow users to evade even sophisticated detection techniques.
What is the "Mixer Rule"?
The Treasury's mixer rule is not so much a mixer rule rather than a blanket ban on any software and even behavior that would grant users of public blockchains transactional privacy.
Notably, the mixer rule's suggestions on cryptocurrency swaps, transaction delays, "splitting," and the creation of single-use addresses, wallets, and accounts, would even put users under suspicion with the authorities, potentially ending in criminal liability – similar to how transaction structuring, sometimes also known as "smurfing," is deemed a federal crime in traditional finance, referring to the intentional breakup of transactions to fall below the $10,000 currency transaction reporting requirement.
In traditional finance, smurfing carries a federal prison sentence of up to 5 years, even if the money transferred did not stem from illicit origins.
Banning All Cryptocurrency Transactions for non-US Jurisdictions
The Special Measures to Fight Modern Threats Act, originally introduced in 2022 by Representative Himes of Connecticut as part of the COMPETES Act, would effectively grant the Treasury the power to ban any type of transaction it deems a concern without public notice or input under PATRIOT Act authority.
"one likely scenario is that the Treasury would use this authority to prohibit U.S. banks from being involved with cryptocurrency transactions validated by miners located outside of the United States."
I can understand the need for financial regulation, but when banks don't lose their license to practice after getting caught laundering hundreds of millions for drug cartels, I find the government to be extremely hypocritical. When financial institutions are corrupt, they deserve to go down. But they never do, because they are "too big to fail".
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