U.S. Policy Shift: The Treasury Department Officially Recognizes Legitimate Uses of Crypto Mixers, but New "Freezing Rights" Regulations May Spark Controversy

March 9 News: The U.S. Department of the Treasury recently submitted a digital asset regulation report to Congress that explicitly states that cryptocurrency mixers can have legitimate uses in certain circumstances, such as protecting user transaction privacy and business payment information. This statement is seen as a significant shift in the U.S. government’s attitude toward blockchain privacy tools. In recent years, regulators have often viewed mixing services as important tools for money laundering and illegal fund transfers.

The report was submitted under the framework of the GENIUS Act and marks the Treasury’s first official acknowledgment of the privacy value of mixing services in policy documents. The report notes that because public blockchain transactions are default open, users engaging in commercial payments, charitable donations, or personal asset transfers often seek privacy tools to reduce data exposure risks. As digital asset payments expand, the market’s demand for transaction privacy protection is expected to continue rising.

This statement contrasts sharply with previous regulatory positions. In 2022, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, citing its use by North Korean hacker group Lazarus for money laundering. Although the latest report does not revoke the sanctions, the language has noticeably softened.

Ethereum co-founder Vitalik Buterin has also repeatedly emphasized the importance of blockchain privacy tools. He publicly supported Tornado Cash developer Roman Storm and stated that privacy protocols are not criminal tools but necessary mechanisms to protect user security. Roman Storm was sentenced in 2025 for operating an unlicensed remittance business and faces up to five years in prison.

However, the U.S. Treasury also emphasizes that the misuse of mixers remains a serious issue. The report shows that between 2024 and 2025, North Korean-related hacking groups stole at least $2.8 billion in digital assets, much of which was hidden through mixing services. Additionally, of the approximately $37.4 billion in stablecoins transferred via cross-chain bridges since 2020, about $1.6 billion are linked to mixing services.

Another notable proposal in the report is the so-called “freezing authority.” Under this concept, crypto asset platforms could temporarily freeze relevant assets upon detecting suspicious transactions without court orders or formal charges. Analyst Kyle Chasse pointed out that under suspicious activity reporting rules, platforms might even be unable to explain the freezing reasons to users, potentially leading to disputes over financial oversight.

The Treasury states that this authority is limited in scope, but critics believe its actual implementation could expand. Meanwhile, regulators also plan to further clarify the compliance obligations of decentralized finance (DeFi) projects regarding anti-money laundering and counter-terrorism financing. How Congress and courts will define these rules in the future will largely determine the legal status of privacy tools in the crypto space.