The U.S. Treasury Department has made a significant shift in its approach to crypto mixers, acknowledging their legitimate uses for financial privacy while proposing new legislative tools to combat illicit finance, including a ‘hold law’ to freeze suspicious digital assets temporarily.
A New Perspective on Crypto Mixers
In a 32-page report submitted to Congress under the GENIUS Act, the U.S. Treasury Department has recognized that bitcoin and crypto mixers can serve legitimate financial privacy purposes. This acknowledgment marks a departure from the department’s previous stance, which included sanctioning Tornado Cash in 2022 and designating international mixers as money-laundering hubs in 2023.
The report highlights that lawful users may employ mixers to protect sensitive information related to personal wealth, business payments, and charitable donations. This recognition is a significant step toward balancing privacy concerns with the need to combat financial crime.
Addressing Illicit Finance
While the Treasury Department is softening its stance on mixers, it remains vigilant about the misuse of these tools by criminal actors, particularly those linked to North Korea. The report cites that DPRK-affiliated cybercriminals stole at least $2.8 billion in digital assets between January 2024 and September 2025, including a $1.5 billion hack of the Bybit exchange.
In these operations, mixers are often used to break tracing links, frequently in combination with stablecoin swaps and cross-chain bridges. The Treasury’s data shows that since May 2020, more than $37.4 billion in withdrawals from over 50 bridges were denominated in the two largest stablecoins by market capitalization. Of this total, approximately $1.6 billion flowed from mixing services, with over $900 million concentrated in a single bridge scrutinized for DPRK-linked activity.
New Legislative Tools
To combat illicit finance, the Treasury Department is proposing a ‘hold law’ that would provide financial institutions with temporary safe harbor to freeze suspicious digital assets during brief investigations. This law is particularly aimed at countering illicit finance involving permitted stablecoins, which are increasingly used in criminal activities.
The report also recommends that Congress specify which actors in the decentralized finance (DeFi) ecosystem should face anti-money laundering (AML) and countering the financing of terrorism (CFT) obligations based on their roles and associated risks. Additionally, it proposes expanding Section 311 of the USA PATRIOT Act to authorize the Treasury to impose conditions on certain digital asset transfers that fall outside correspondent banking relationships.
Industry Reactions and Forward-Looking Insights
The report has been met with mixed reactions from industry groups. Galaxy Research, for instance, warned in January that the Senate Banking Committee’s CLARITY Act could represent the largest expansion of financial surveillance authority since the Patriot Act. However, the Treasury’s acknowledgment of the legitimate uses of mixers is seen as a positive step by privacy advocates.
The U.S. Treasury framed the report within a broader effort to study innovative tools for detecting illicit activity in the crypto space, as mandated by the 2025 GENIUS Act. The report draws on more than 220 public comments and consultations with financial institutions, blockchain analytics firms, crypto firms, law enforcement, and recent national risk assessments.
As the crypto industry continues to evolve, the Treasury’s balanced approach to regulation is crucial. By recognizing the legitimate uses of mixers and proposing targeted measures to combat illicit finance, the department is paving the way for a more nuanced and effective regulatory framework that can foster innovation while ensuring financial integrity.
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