US Treasury Acknowledges Legitimate Uses of Crypto Mixers
📋 En bref (TL;DR)
- Official report: The U.S. Treasury submitted a 32-page report to Congress acknowledging the legitimate uses of crypto mixers for privacy protection.
- Privacy validated: Lawful users may use mixers to protect their sensitive financial information on public blockchains.
- Proposed hold law: The Treasury recommends Congress create a legal framework allowing crypto platforms to temporarily freeze suspicious funds.
- North Korean threat: The report reveals that cybercriminals linked to North Korea stole at least $2.8 billion in digital assets between January 2024 and September 2025.
- Stablecoin flows: Over $1.6 billion in deposits from mixing services have flowed through crypto bridges since May 2020.
- GENIUS Act: This report was commissioned under Section 9 of the GENIUS Act, signed in July 2025, which governs stablecoin regulation.
- Regulatory shift: This document marks a major change in posture for the Treasury, which had sanctioned Tornado Cash in 2022 and designated mixers as money laundering tools in 2023.
The U.S. Department of the Treasury has just published a 32-page report addressed to Congress, in which it officially acknowledges that crypto mixers serve legitimate privacy needs. The document, titled “Innovative Technologies to Counter Illicit Finance Involving Digital Assets,” marks a significant turning point in U.S. policy toward these controversial tools.
Until now, the Treasury had adopted a decidedly hostile stance toward mixers. In August 2022, it sanctioned Tornado Cash, and in 2023, it designated international mixers as money laundering hubs. This new report, commissioned under Section 9 of the GENIUS Act signed in July 2025, represents a notable change of course: financial privacy is now recognized as a valid concern, even in the world of digital assets.
A report that recognizes privacy as a legitimate need
The U.S. Treasury did not take this decision lightly. In its report, it explicitly states that “lawful users of digital assets may use mixers to ensure their financial privacy when conducting transactions on public blockchains.” The document specifies that individuals may legitimately wish to protect sensitive information about their personal wealth, business payments, or charitable donations.
The report goes further by anticipating the growing adoption of cryptocurrencies in everyday payments. According to the Treasury, “as consumers increase their use of digital assets for payments, individuals may wish to use mixers to maintain greater privacy in their spending habits.”
This recognition is all the more remarkable given that it comes from an institution that, less than four years ago, took punitive measures against these very technologies. The report draws an important distinction between lawful and illicit uses, rather than condemning the technology as a whole.
Custodial vs. non-custodial mixers: a key distinction
The Treasury introduces a crucial technical distinction in its analysis. So-called “custodial” (or centralized) mixers, which temporarily take control of users’ funds, could theoretically provide identifying information useful for tracking transactions and their originators.
In contrast, “non-custodial” (or decentralized) mixers, such as Tornado Cash, pose far greater regulatory challenges. The Treasury notes that these tools are exploited by cybercriminals, particularly hackers linked to North Korea, for money laundering and moving illicit funds.
Notably, the report does not recommend new restrictions on non-custodial mixers. Nor does it finalize FinCEN’s 2023 proposed rulemaking on mixer-related recordkeeping, instead referring to the July 2025 presidential working group report that recommended the Treasury “consider next steps” while balancing illicit finance risks and privacy concerns.
The proposed “hold law” for suspicious funds
Beyond simply acknowledging legitimate uses, the report makes a major legislative recommendation: the creation of a “hold law” specific to digital assets. This legal mechanism would provide financial institutions and crypto platforms with a secure legal framework to temporarily freeze suspicious assets during a short investigation period.
In practical terms, this hold law would function as a legal “safe harbor.” Crypto platforms that detect suspicious transactions could block the funds in question without fear of lawsuits from account holders. The Treasury describes this tool as “particularly useful for countering illicit finance involving authorized payment stablecoins.”
This approach reflects a pragmatic logic: rather than banning privacy technologies, the U.S. government proposes giving market participants the legal tools to cooperate with authorities in cases of suspicion, while preserving the ability of honest users to protect their privacy.
Alarming data on crypto crime
The Treasury report draws on exclusive data to justify the need for new tools to combat crime. The figures speak for themselves: cybercriminals linked to North Korea (DPRK) stole at least $2.8 billion in digital assets between January 2024 and September 2025. This amount includes the spectacular hack of the Bybit exchange, estimated alone at $1.5 billion.
The Treasury also reveals that since May 2020, over $1.6 billion in deposits from mixing services have flowed into crypto bridges. Even more concerning, over $900 million was directed to a single bridge linked to North Korean money laundering. These flows illustrate how mixers are integrated into complex, multi-step laundering chains.
However, the report notes that direct deposits of stablecoins into mixers for illicit purposes “appears to be low,” which reinforces the argument that the vast majority of mixer users have no criminal intent.
Tornado Cash: the precedent that changed everything
To understand the significance of this shift, we must look back at the Tornado Cash saga. In August 2022, the U.S. Treasury, through OFAC (Office of Foreign Assets Control), sanctioned this decentralized mixing protocol on Ethereum. This unprecedented decision shocked the crypto industry: for the first time, open-source computer code was treated as an entity that could be sanctioned.
The situation changed in November 2024, when the Fifth Circuit Court of Appeals ruled that Tornado Cash’s immutable smart contracts do not constitute “property” that can be blocked under the International Emergency Economic Powers Act (IEEPA). This ruling paved the way for the lifting of sanctions against the protocol in March 2025.
Meanwhile, the criminal prosecution of co-founder Roman Storm resulted in a mixed verdict in August 2025. A jury found him guilty of conspiracy to operate an unlicensed money transmitting business, but was unable to reach a verdict on the more serious charges of money laundering and sanctions violations. This outcome illustrates the difficulty the justice system faces in addressing these technologies within existing legal frameworks.
The GENIUS Act: a regulatory framework under construction
The Treasury report falls within the broader framework of the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), signed by President Trump in July 2025. This law constitutes the first comprehensive regulatory framework for stablecoins in the United States.
Section 9 of the GENIUS Act, dedicated to anti-money laundering (AML) innovation, required the Treasury to submit its findings to Congress within 180 days. The report, dated March 2026, arrived approximately seven weeks late relative to the January 14 deadline, which speaks to the complexity of the topics addressed.
The Treasury also recommends that Congress precisely define which decentralized finance (DeFi) actors should be subject to anti-money laundering and counter-terrorism financing obligations. This question lies at the heart of current debates, as global regulators work to extend KYC and AML standards to the DeFi sector without stifling innovation.
A delicate balance between privacy and security
This Treasury report is part of a global debate that extends well beyond American borders. The central question is: how to reconcile the right to financial privacy with the need to prevent money laundering and the financing of illicit activities?
On one hand, privacy advocates point out that public blockchains expose all transactions to public view by default. Without privacy tools like mixers or privacy coins, every purchase, every donation, every financial movement is potentially traceable. In this context, mixers play a role analogous to that of cash in traditional finance: they enable transactions without permanent surveillance.
On the other hand, authorities emphasize that these same tools are used by rogue states, hacker groups, and criminal organizations to conceal massive financial flows. The Bybit hack and the billions stolen by actors linked to Pyongyang illustrate the severity of the threat.
The Treasury report attempts to chart a middle course. By recognizing the legitimacy of private uses while proposing new intervention tools such as the hold law, it outlines a regulatory model that could inspire other jurisdictions. The challenge in the months ahead will be whether Congress transforms these recommendations into concrete legislation, and whether this framework will effectively protect honest users without creating new vulnerabilities exploitable by criminals.
Glossary
- Crypto mixer: A service or protocol that blends transactions from multiple users to obscure the origin and destination of funds on a blockchain. Mixers can be centralized (custodial) or decentralized (non-custodial).
- Tornado Cash: A decentralized mixing protocol on Ethereum, sanctioned by OFAC in 2022 then removed from the sanctions list in March 2025 following a favorable court ruling.
- Privacy coin: A cryptocurrency designed to offer a high level of transaction confidentiality (examples: Monero, Zcash). Unlike Bitcoin, privacy coins obscure amounts, addresses, or both by default.
- Sanctions: Restrictive measures imposed by a government (via OFAC in the United States) prohibiting citizens and businesses from conducting transactions with designated entities or individuals.
- Blockchain: A distributed and immutable digital ledger that records all transactions transparently. On public blockchains like Bitcoin or Ethereum, every transaction is visible to everyone.
- KYC (Know Your Customer): Identity verification procedures imposed on financial institutions to know their clients and prevent fraud and money laundering.
- AML (Anti-Money Laundering): A set of laws, regulations, and procedures designed to prevent money laundering. AML obligations apply to banks and increasingly to crypto platforms.
Frequently Asked Questions
What is a crypto mixer and why is the U.S. Treasury interested in it?
A crypto mixer is a service that blends transactions from multiple users to make it difficult to trace the origin of funds on a public blockchain. The U.S. Treasury is interested because these tools are used both for legitimate privacy reasons (protecting one’s wealth, spending habits) and for illicit purposes (money laundering by criminal or state-sponsored groups). The March 2026 report officially acknowledges this dual reality for the first time.
What does the “hold law” recommended by the Treasury propose?
The “hold law” is a legal mechanism proposed by the Treasury that would give crypto platforms and financial institutions the right to temporarily freeze suspicious funds during a short investigation. This framework would function as a “safe harbor,” legally protecting platforms against potential lawsuits from holders of frozen accounts. The Treasury considers it “particularly useful” for authorized payment stablecoins.
Are crypto mixers illegal in the United States?
No, crypto mixers are not illegal per se in the United States. The Treasury’s March 2026 report confirms that using them for privacy purposes is legitimate. However, using them to conceal funds of criminal origin or to circumvent sanctions remains illegal. Centralized mixers may be subject to registration requirements as a money services business (MSB) with FinCEN.
What is the connection between this report and the Tornado Cash case?
The Treasury report marks a significant evolution since the Tornado Cash affair. In 2022, the Treasury sanctioned this decentralized mixer on Ethereum. After a legal battle, the sanctions were lifted in March 2025 following a ruling by the Fifth Circuit Court of Appeals. The current report reflects this evolution by acknowledging that mixing technology itself is not inherently illicit, a position quite different from the one adopted during the 2022 sanctions.
What is the GENIUS Act and what role does it play in this story?
The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) is a U.S. law signed in July 2025 that establishes the first comprehensive regulatory framework for stablecoins in the United States. Its Section 9, dedicated to anti-money laundering innovation, ordered the Treasury to produce a report on innovative technologies to counter illicit finance involving digital assets. It was this mandate that led to the report acknowledging the legitimate uses of mixers.
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Sources
- The Block – Treasury tells Congress mixers have valid privacy uses, recommends ‘hold law’ for suspicious crypto (March 2026)
- Cointelegraph – US Treasury Says ‘Lawful’ Crypto Users Have Valid Reasons To Use Mixers (March 2026)
- Venable LLP – A Legal Whirlwind Settles: Treasury Lifts Sanctions on Tornado Cash (April 2025)
- Mayer Brown – The Tornado Cash Trial’s Mixed Verdict: Implications for Developer Liability (August 2025)
- Gibson Dunn – The GENIUS Act: A New Era of Stablecoin Regulation (2025)
