U.S. Treasury Nears Final Rule to Ban Crypto Mixers

The U.S. Treasury Department is preparing to introduce one of its most aggressive cryptocurrency regulations yet — a measure that could effectively ban software used to obscure digital asset transactions.

Andrea Gacki, Director of the Financial Crimes Enforcement Network (FinCEN), told lawmakers this week that the so-called “mixer rule” is now in its final stage. Leveraging powers granted by the PATRIOT Act, the proposal would expand anti-money laundering (AML) controls to cover privacy-focused tools regulators argue undermine financial transparency.

Broad scope and controversy

The draft rule is expected to cast a wide net. Beyond targeting traditional crypto mixers, it could classify practices such as splitting transfers, rotating wallets, swapping coins, or delaying transactions as suspicious activity. Critics warn that such broad definitions risk criminalizing routine user behavior, drawing comparisons to the financial crime of “smurfing,” where large sums are broken into smaller transfers to avoid detection.

At the same time, Congress is advancing the Special Measures to Fight Modern Threats Act, which would give the Treasury even greater authority to block transactions routed through foreign exchanges, miners, or validators. Opponents say these steps could pressure U.S. banks and trading platforms to retreat from global crypto activity altogether, branding the approach “authoritarian” and overly punitive.

Supporters vs. critics

Proponents argue the regulations are essential to curb money laundering and terrorist financing, highlighting the misuse of privacy-enhancing tools by criminal networks. But industry advocates counter that an outright ban would punish legitimate users as well – particularly individuals in repressive regions who rely on such technologies for basic financial protection.

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Timeline and impact

While the Treasury has not given a firm timeline, insiders suggest the final version of the rule could be unveiled within weeks. If enacted, the measure would mark a major escalation in Washington’s oversight of digital assets, with the potential to reshape how Americans can legally use cryptocurrency both domestically and abroad.