The U.S. Treasury Department told Congress that bitcoin or crypto mixers can serve legitimate financial privacy purposes, signaling a shift in the government’s approach to blockchain privacy tools.
The 32-page report, submitted under the GENIUS Act, also proposes new legislative tools to combat illicit finance, including a “hold law” that would give financial institutions temporary safe harbor to freeze suspicious digital assets.
The report acknowledges that lawful users may employ mixers to protect sensitive information on personal wealth, business payments, or charitable donations.
This represents a recalibration from Treasury’s earlier stance, which included sanctioning Tornado Cash in 2022 and designating international mixers as money-laundering hubs in 2023.
At the same time, Treasury data shows that criminal actors, particularly those linked to North Korea, continue to exploit mixers.
The report cites DPRK-affiliated cybercriminals who 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 commonly used to break tracing links, often in combination with stablecoin swaps and cross-chain bridges.
New data on crypto laundering
The report provides original Treasury analysis of mixing activity involving stablecoins and bridges.
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 that total, approximately $1.6 billion flowed from mixing services, with over $900 million concentrated in a single bridge scrutinized for DPRK-linked activity.
The Treasury noted in the report that direct stablecoin deposits into crypto mixers for illicit purposes are relatively low, but criminals frequently convert other digital assets through mixers before swapping into stablecoins to obscure the source.
The report distinguishes between custodial and non-custodial crypto mixers. Custodial services, which must register with FinCEN as money services businesses, can provide identity data, off-chain transaction information, and behavioral patterns.
The Treasury does not recommend new restrictions on non-custodial mixers and refrains from finalizing FinCEN’s 2023 proposed recordkeeping rule, instead citing a 2025 Presidential Working Group report recommending careful evaluation of privacy and illicit finance risks.
‘Hold law’ to crack down on illicit activity
Treasury also urged Congress to enact a digital asset–specific “hold law,” creating a temporary safe harbor for freezing suspicious assets during brief investigations.
The department described such a law as particularly useful for countering illicit finance involving permitted stablecoins.
On decentralized finance, the report recommends Congress specify which actors should face anti-money laundering (AML) and countering the financing of terrorism (CFT) obligations based on their roles and associated risks.
It also 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.
These proposals align with concerns raised by industry groups, including Galaxy Research, which in January warned that the Senate Banking Committee’s CLARITY Act could represent the largest expansion of financial surveillance authority since the Patriot Act.
The report comes at somewhat of an inflection point for crypto regulation.
Treasury lifted Tornado Cash sanctions in March 2025 after a federal appeals court found OFAC had exceeded its authority, though a Manhattan jury later convicted co-founder Roman Storm of operating an unlicensed money transmitter.
The Department of Justice has indicated a narrower approach to prosecuting developers, suggesting that coding privacy tools without criminal intent should not constitute a violation.
The U.S. Treasury framed the report within a broader effort to study “innovative or novel” tools for detecting illicit activity in crypto, 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.
