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New Legislative Efforts to Target Crypto Mixers in Money Laundering Crackdown

Legislative actions against crypto mixers

House Democrats are spearheading a legislative effort to regulate cryptocurrency mixers as part of a broader initiative to combat money laundering in the digital asset space.

Key takeaways:

  • Legislation targeting crypto mixers aims to mitigate their use as tools for money laundering, with strong backing from several House Democrats.
  • The bill faces challenges in a Republican-majority House but highlights critical issues in the ongoing debate over cryptocurrency regulation.
  • Concerns extend to the use of cryptocurrencies like Tether in potentially supporting international conflicts and criminal activities.

House Democrats are taking decisive steps to intensify the regulation of cryptocurrency mixing services, which they argue are frequently used for money laundering. Representative Sean Casten (D-Ill.) has announced upcoming legislation specifically designed to "clamp down on mixers." This move comes amid ongoing efforts by U.S. authorities to address the challenges posed by these services, which they claim obfuscate the source of illicit funds.

Details of the proposed legislation

The forthcoming bill, supported by Representatives Brad Sherman (D-Calif.), Emanuel Cleaver (D-Mo.), and Bill Foster (D-Ill.), aims to establish stringent controls over crypto mixers. During a recent hearing on U.S. securities enforcement practices, Rep. Casten expressed a firm stance, stating, "The presumption should be that these are money laundering channels," unless proven otherwise by thorough audits. This legislation is part of a broader crackdown that includes high-profile cases like Tornado Cash and actions against the developers behind Samourai Wallet.

Despite the Republican majority in the House, which might hinder the bill's progress, its introduction underscores the ongoing debate within Congress regarding the appropriate regulatory framework for cryptocurrencies. The issue of illicit finance via cryptocurrencies remains central to these discussions. Rep. Casten also raised concerns about the stablecoin Tether (USDT), citing reports of its use in funding harmful activities and supporting 

"Russia's war machine."

The hearings also revealed a partisan divide on the approach to crypto regulation. Democratic lawmakers criticized the cryptocurrency industry's resistance to regulation, with Rep. Sherman describing the sector as a "garden of snakes." On the other hand, Republican members like Rep. Bill Huizenga (R-Mich.) criticized the Securities and Exchange Commission (SEC) for what they perceive as overly aggressive enforcement actions against digital assets, highlighting the controversy over the SEC's handling of the DEBT Box case and its frequent issuance of Wells notices.