US Treasury Targets Crypto Mixers and DeFi with PATRIOT Act Expansion

The US Treasury Department is preparing to extend Section 311 of the PATRIOT Act to cryptocurrency activities, marking a significant escalation in regulatory scrutiny. The move would classify crypto mixing services as a "primary money laundering concern," granting authorities the power to sever their access to the US financial system.

FinCEN's proposed rule mirrors its 2022 crackdown on Tornado Cash but with broader implications. The regulation could prohibit banks, exchanges, and payment processors from engaging with mixers, DeFi protocols, and certain wallet providers. Privacy-focused tools face existential threats as the government revives its war on crypto anonymity.

Market participants brace for impact as the Treasury seeks to impose traditional financial surveillance frameworks on digital assets. The coming rule may redefine compliance standards across exchanges and decentralized platforms alike.