Swan, a Bitcoin service platform, notified its users that compliance with FinCEN regulation would compel the termination of accounts utilizing crypto-mixing services.
In a letter to customers, the policy was elucidated, with the implication that the modifications were necessitated by a proposed rule by the Financial Crimes Enforcement Network (FinCEN), which imposes additional obligations on organizations handling transactions involving merging services.
Yan Pritzker, one of the firm’s co-founders, explained on X (previously Twitter) on November 12 that while the firm does not oppose the use of privacy blending tools and services, it must comply with the responsibilities of its partner banking institutions.
According to Pritzker, the proposed FinCEN rule needs to be revised in its drafting and encompasses many Bitcoin-related activities. It prescribes the mingling of funds, programmable transactions (Lightning channels), and mixing BTC addresses only once.
Furthermore, he stated that mixing services is misrepresented as a means to divide large Bitcoin blocks into smaller ones with privacy in mind.
In addition to portraying crypto-mixing services as a conduit for illegal activities, U.S. financial regulators have imposed restrictions on these services. In addition to sanctioning such activities, they have prosecuted and imprisoned the developers of Tornado Cash for their execution.
“In fact, we have written and published privacy guides that encourage mixing and promoted companies like Wasabi and Samourai. We believe that mixing is normal, privacy is not a crime, and that using unmixed Bitcoin is similar to bringing your whole paycheck to the grocery store to pay for an apple, “ Pritzker explained.
According to Pritzker, the banking sector is highly fearful due to the current political climate; most institutions have refused to do business with anything in “cryptocurrency.” Therefore, to sustain their Bitcoin on-ramp services, their custody partner must engage in banking transactions subject to FinCEN regulations.
Swan Bitcoin also suggested methods for opposing such policies in its letter to customers, stating that educating the general public about Bitcoin is the initial step in that direction.
