The U.S. Treasury has recognized the legitimacy of crypto mixers for protecting financial privacy, while addressing concerns over criminal use.
The U.S. Treasury has issued a report to Congress affirming the legality of crypto mixers for safeguarding financial privacy. Previously, in 2022 and 2023, the Treasury had classified mixers as tools for money laundering and imposed sanctions on Tornado Cash. However, the new report recognizes that legitimate users rely on these services to protect sensitive financial information, such as personal savings and business transactions.
Despite this acknowledgment, the Treasury remains concerned about the criminal misuse of mixers. It reported that from January 2024 to September 2025, North Korean hackers are estimated to have stolen $2.8 billion in cryptocurrency, with $1.5 billion linked to the Bybit exchange hack. Criminals often use mixers to obscure their activities.
Analysis of Mixers and Stablecoins
The Treasury's report includes an analysis of how mixers interact with stablecoins and cross-chain bridges. Since May 2020, over $37.4 billion has been withdrawn from major stablecoins via 50 different bridges, with roughly $1.6 billion moving from mixers to these platforms, including over $900 million associated with North Korean hackers.
Criminals generally do not deposit fiat-pegged tokens directly into mixers but instead use other assets. Upon exiting a mixer, they typically convert their coins into stablecoins to sever the transaction trail before converting to fiat currency.
Regulatory Framework and Mixer Types
The report differentiates between custodial and non-custodial mixers. Custodial services must register with FinCEN and provide authorities with transaction data, while the Treasury has not recommended new restrictions for non-custodial services. The aim is to balance the risks of illicit financing with the public's right to privacy.
Proposed Legislative Changes
The Treasury has urged Congress to enact several new laws, including:
- Introduction of a freeze right: Allowing financial institutions to temporarily block suspicious cryptocurrency assets during investigations.
- Clarification of DeFi regulations: Defining which decentralized finance participants must comply with anti-money laundering requirements.
- A "sixth special measure" under the U.S. Anti-Terrorism Act: Granting the Treasury the authority to block cryptocurrency transfers outside of correspondent banking relationships.
Shift in Government Attitude
This report signals a notable shift in government policy regarding cryptocurrency privacy. Following a court ruling in March 2025, sanctions against Tornado Cash were lifted. Although the service's co-founder, Roman Storm, was convicted of operating without a license, the jury could not reach a verdict on money laundering charges. Additionally, Matthew Galeotti from the Department of Justice stated that the department would stop prosecuting DeFi developers for operating without a license. In January 2026, Senators Cynthia Lummis and Ron Wyden introduced a bill exempting developers and non-custodial service providers from needing money transmitter licenses.
