- A new bill from House Financial Services Committee Democrats is expected to target crypto mixing services this week.
- Legislation from the minority party is unlikely to move the needle in the waning months of the House's crypto negotiations, though its topic is at the center of discussions over illicit finance in the digital assets sector.
Several Democrats on the House Financial Services Committee have a bill coming this week to target money laundering through cryptocurrency mixing services, said Rep. Sean Casten (D-Ill.), one of its backers.
The legislation will "clamp down on mixers," Casten said of the bill during a hearing Tuesday on U.S. securities enforcement practices, adding that the effort will 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 sufficient audit work shows otherwise. "Let's go through and get that cleaned up and fixed."
Such a bill would arrive as U.S. authorities continue to crack down on mixers, accusing the privacy services of being tools for illicit finance, including in the well-known Tornado Cash case and the more recent pursuit of the developers behind Samourai Wallet. A Democrat bill arriving in the Republican-majority House during this latter stage of the congressional session is unlikely to go anywhere, but it highlights one of the central points around illicit finance at the heart of lawmaker negotiations about future crypto policy.
Casten also noted Tuesday his concerns about the offshore-issued stablecoin, Tether (USDT), and reports that it's backed "Russia's war machine" and been used for funding Hamas.
Despite crypto lobbyists' ongoing insistence that digital assets policy is a bipartisan exercise, the hearing saw Democrats finding fault with the crypto industry while Republican lawmakers criticized the aggressive enforcement posture of the Securities and Exchange Commission (SEC) and its use of legal actions to try to steer industry behavior.
Rep. Bill Huizenga (R-Mich.) was among Republicans who highlighted the recent scandal of SEC lawyers' abuses in the DEBT Box case, and he also noted that the agency is using it's so-called Wells notices – written alerts to a company warning of planned enforcement actions – "at an astonishing rate, especially when it comes to digital assets."
Sherman, one of the backers of the pending mixer bill and a very vocal crypto critic, argued that the digital assets industry "has fought tooth and nail against any meaningful regulation."
"Crypto is a garden of snakes," he said. "Recent SEC actions illustrate that."