After years of opposition to cryptocurrency mixers, on-chain services that obfuscate digital asset transactions, the U.S. Treasury Department now says they may have legitimate privacy uses as well as their vaunted criminal applications.
In a report relating to the implementation of the Genius Act, the Treasury recognized that mixing services can serve lawful purposes on public blockchains. This includes protecting personal finances, business transactions and charitable donations from public traceability. The ministry emphasized that privacy tools can coexist with compliance when properly designed, for example through recordkeeping or other safeguards.
“As consumers increasingly use digital assets for payments, individuals may want to use mixers to maintain more privacy about their spending habits,” Treasury noted in the report.
Mixers, which obscure the origin and destination of digital asset transactions by pooling user funds, have long been controversial in Washington. In 2022, the Treasury’s Office of Foreign Assets Control (OFAC) blacklisted Ethereum-based mixer Tornado Cash, accusing it of facilitating the laundering of billions of dollars in illicit crypto linked to the North Korean hacking group Lazarus. The sanctions effectively blocked Americans from using the tool and sparked one of the most contentious regulatory fights in crypto.
In 2025, the government delisted Tornado Cash following legal challenges and an appeals court ruling questioning the Treasury’s authority to impose sanctions on open source smart contracts. Although out on bail, Tornado Cash co-founder and developer Roman Storm still faces legal issues, with prosecutors saying they have enough evidence to show he built features into the mixer knowing they would help cybercriminals.
The report does not abandon concerns about illicit financing. It highlights mixers as tools often used to hide stolen funds and highlights the need for stronger anti-money laundering (AML) controls on digital assets. But it also indicates that privacy technology itself is not inherently illegal.
Beyond mixes, the report signals broader policy changes. Treasury encourages Congress to clarify which decentralized finance (DeFi) players should be subject to AML requirements, explore digital identity tools that enable compliance without excessive data collection, and consider new authorities allowing institutions to temporarily freeze suspect digital assets.
