UK Crime Agency Wants to Regulate Crypto Transaction Mixers

Crypto mixer, which can obfuscate data linking a user to certain transactions, is designed to preserve privacy. But it also makes an obvious hotbed for all sorts of illicit activities. Hence, governments and regulators have expressed concerns over such protocols.

The UK’s National Crime Agency (NCA) is the latest to call for regulating protocols that enable users crypto mixing technology.

Call for Tighter Regulation

As per the latest report, the NCA said the mixers should be subjected to regulations that would authorize them to conduct certain provisions, including know-your-customer (KYC) and record audit trails of the coins passing through their platforms.

Gary Cathcart, head of financial investigations at the NCA, was quoted saying,

“When it comes to crypto transactions, the owner’s identity is already obscured, and the reality is that prying eyes would need additional, hard to get information, to determine a wallet’s balance and its owner.”

The exec also added that the argument on privacy is a “weak one.”

Cathcart believes stringent rules would offer “comfort” to users and help law enforcement obtain judge-approved court orders for investigative purposes. He also said regulations could provide clarity to the authorities and help distinguish between coin mixers that are being used for privacy and facilitating serious criminal activity such as ransomware attacks and international terrorism.

The NCA head also pointed out that “the exponential adoption of cryptocurrencies” can trigger criminal entities leveraging coin mixers even as the overall volume of crypto-related money laundering is minuscule compared to the broader economy.

Are Mixers Illegal?

This isn’t the first time that regulatory entities have expressed concerns about coin mixers’ potential for fostering criminal activity and sanctions evasion. But the legality of Bitcoin mixers depends on different jurisdictions. Even if the project considers to be decentralized, but creators maintain sufficient control over the application, compliance may still be required.

However, many popular “anonymizing software providers,” including Tornado Cash, have been excluded from FinCEN’s money transmitter regulations, but the crackdown against these “privacy tools” continues.

In February 2021, then-US Deputy Assistant Attorney General Brian Benczkowski said, “seeking to obscure virtual currency transactions (through a mixer) is a crime.” During the same time, the US authorities arrested Roman Sterlingov, the Russian-Swedish founder of Bitcoin tumbling service ‘Bitcoin Fog.’ Larry Deen Harmon, the founder of Helix, another Bitcoin mixer, pleaded guilty to helping criminals launder $300 million.

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Source: https://cryptopotato.com/uk-crime-agency-wants-to-regulate-crypto-transaction-mixers/