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In a policy change, US Treasury Department informed lawmakers that certain cryptocurrency mixing tools offer real value in protecting user privacy in daily life transactions.
offered under GENIUS Act Against this backdrop, the department’s latest assessment to Congress acknowledges that individuals and businesses engaging in public blockchains may turn to these services to shield sensitive details such as personal net worth, corporate transfers or charitable contributions from public scrutiny.
Like digital currencies According to the report, routine payments attract attention notesUsers are increasingly looking for ways to maintain spending discretion in a fully transparent ledger environment.
Mixing services works by aggregating and redistributing assets in a way that breaks direct connections between sender and receiver addresses.
The Treasury draws a clear line between centralized platforms that currently operate under money services business rules and can share customers. data decentralized alternatives that work without intermediaries when necessary.
Notably, the ministry stopped short of endorsing new restrictions on the second category or reviving earlier proposals for mandatory reporting of mixing activity.
This stance contrasts sharply with actions taken several years ago when authorities sanctioned high-profile instruments such as Tornado Cash over concerns about criminal exploitation.
Recent court decisions and enforcement regulations have since softened this approach, reflecting a growing appreciation for legitimate applications of the technology.
The report also does not downplay persistent dangers.
State-sponsored actors, especially those affiliated north koreaContinue to route billions of stolen cryptocurrencies through layered laundering sequences that often include mixing steps.
Treasury data reveals such groups stole at least $2.8 billion between the beginning of 2024 and the end of 2025 alone digital assetsIt often swaps tokens between exchanges, obscuring traces through mixers, and transferring proceeds to stablecoins for easier conversion to cash.
Since 2020, more than $1.6 billion in deposits originating from mixing services have flowed onto major cross-chain bridges, with a significant portion connected to sanctioned networks.
These patterns highlight how cloaking tools are used. privacy-Positive for law-abiding participants, may complicate detection efforts by regulators and law enforcement.
To address this tension without stifling innovation, Treasury is calling on Congress to create a special “digital asset holding” law.
The proposed legislation would create a legal safe harbor, allowing regulated entities to temporarily pause or secure assets suspected of illicit involvement during short investigation windows.
Specifically designed for: stablecoin For transactions that settle almost instantaneously on-chain, this measure will protect compliant firms from liability and give authorities time to obtain warrants or complete investigations.
Proponents argue that this narrow authority mirrors the freezing powers of traditional banking but adapts them to the borderless, agent-light nature of blockchain finance.
The report calls for clearer definition of anti-money laundering responsibilities beyond the blocking mechanism. decentralized finance Protocols based on each participant’s role and risk exposure.
It also proposes exploring an additional special measure to impose conditions on certain individuals under the USA PATRIOT Act. digital asset transfers that escape standard oversight channels.
Analysts See the recommendations as a pragmatic middle ground. By formally verifying privacy use cases, the Treasury equips institutions with targeted tools to disrupt suspicious flows. regulator An environment that encourages responsible adoption of digital assets.
Lawmakers now face the task of translating these ideas into law, potentially reshaping how the United States balances individual financial privacy with collective security needs. crypto- sector.
