FinCEN Proposes New Rules that Could Impact Bitcoin's CoinJoin Services Alongside Mixers

cryptonews.com:

The Financial Crimes Enforcement Network (FinCEN) has put forward a notice of proposed rulemaking that could have significant implications for the crypto mixers, including Bitcoin (BTC)'s CoinJoin. 

If these new rules are implemented, they would classify the mixing of convertible virtual currencies as a "primary money laundering concern," affecting both dedicated tumblers like Tornado Cash and service providers utilizing basic privacy protocols, Protos reported Monday. 

FinCEN's proposal comes amid increasing concern that malicious actors are exploiting crypto-mixing services to launder illicit funds. 

The bureau specifically mentioned groups such as Hamas, Palestinian Islamic Jihad, Russian criminal organizations, and the Democratic People's Republic of Korea as examples. 

The report claimed that recent incidents involving these groups, such as the receipt of Tron-based USDT by Palestinian Islamic Jihad and digital asset donations seized from Hamas, have highlighted the need for increased transparency and compliance measures.

The proposed rules would require financial institutions to maintain records and reports related to transactions involving digital asset tumblers. 

Essentially, this means that operators of crypto tumblers would be subject to know-your-customer (KYC), anti-money laundering (AML), and combating the financing of terrorism (CFT) requirements.

FinCEN's rulemaking is grounded in Section 311 of the USA Patriot Act, which empowers the Treasury Secretary to identify and take special measures against entities classified as "primary money laundering concerns." 

These measures could include prohibiting correspondent or payable-through accounts, verifying the purpose and source of funds for payments, imposing