Crypto Mixers Targeted in U.S. House Democrats’ Effort to ‘Clamp Down’ on Money Laundering

A new bill from House Financial Services Committee Democrats is expected this week to target crypto mixing services.

The minority party’s legislation is unlikely to move the needle in the final months of the House of Representatives’ crypto deliberations, but the issue remains at the center of debate over illicit finance in the digital assets sector.

Rep. Sean Casten (D-Ill.), one of his supporters, said some Democrats on the House Financial Services Committee are considering a bill this week targeting money laundering through cryptocurrency mixing services.

Casten said Tuesday during a hearing on U.S. securities enforcement practices that the bill would “put pressure on the agitators,” adding that the effort would also be supported by Reps. Brad Sherman (D-Calif.), Emanuel Cleaver (D-). Mo.) and Bill Foster (D-Ill.)

“The presumption should be that these are money laundering channels,” Casten said, unless adequate audit work shows otherwise. “Let’s go clean this up and fix it.”

Such a bill would come as U.S. authorities continue to crack down on jammers, accusing privacy services of being vehicles for illicit funding, including the well-publicized Tornado Cash case and the recent pursuit of the developers behind Samourai Wallet. The Democratic bill coming to the Republican-majority House in this final stage of the congressional session is unlikely to go anywhere, but it does highlight one of the central points about illicit finance at the heart of lawmakers’ deliberations on future crypto policy.

Read More: Distilling Tornado Cash and Samourai Suits

Casten on Tuesday also raised concerns about overseas-issued stablecoin Tether {{USDT}}, saying it supports “Russia’s war machine” and is being used to finance Hamas.

Despite crypto lobbyists’ insistence that digital assets policy is bipartisan, Democrats at the hearing found fault with the crypto industry while Republican lawmakers criticized the Securities and Exchange Commission’s (SEC) aggressive enforcement stance and legal action to block it. driving industry behavior.

Rep. Bill Huizenga (R-Mich.) was among Republicans who highlighted the recent scandal over misconduct by SEC attorneys in the DEBT Box case, also noting the agency’s use of so-called Wells notices, written warnings to a company. Warning of planned enforcement actions – “at a staggering rate, especially when it comes to digital assets.”

Sherman, a supporter of the pending mixer bill and a very vocal crypto critic, argued that the digital asset industry is “fighting tooth and nail against any meaningful regulation.”

“Crypto is a snake garden,” he said. “Recent SEC actions demonstrate this.”