"U.S. Treasury Preparing to Apply PATRIOT Act to Virtual Assets…Pushing to Ban Mixers"

The U.S. government is reportedly preparing to apply the PATRIOT Act to Bitcoin (BTC) and virtual assets (cryptocurrencies).

On the 12th, Atlas21, a virtual asset specialist outlet, reported that the Financial Crimes Enforcement Network (FinCEN) under the U.S. Treasury is finalizing regulations to apply the PATRIOT Act to virtual assets and to ban blockchain privacy tools such as mixers. A mixer is an anonymization service that pools multiple users' virtual assets and redistributes them randomly to make it difficult to trace the flow of funds.

Earlier, FinCEN Director Andrea Gacki said at a hearing, "The Treasury is in the final stages of the so-called 'mixer rule'." The regulation would apply to all virtual asset users in the United States and would regard not only mixers but also multi-wallet aggregation, anonymous wallet creation, and micro-transaction splitting — common transaction anonymization practices — as 'major money-laundering concern activities.'

Critics have pointed out that this could effectively criminalize basic privacy practices of virtual asset users. Similar to how smurfing — dividing large sums into small transfers in traditional finance — is defined as illegal, there are concerns that virtual assets could also carry the risk of criminal prosecution.

Meanwhile, the PATRIOT Act was enacted during the Bush administration after the September 11, 2001 attacks and is a law that grants the government broad powers, such as warrantless surveillance and restrictions on judicial procedures in terrorism threat situations. The virtual asset industry has warned that if this measure is implemented, transaction privacy in the United States could effectively disappear.