After years of campaigning against 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 much-hyped criminal applications.
In a report related to the implementation of the Genius Act, the Treasury Department acknowledged that mixing services can serve legitimate purposes on public blockchains. These include protecting personal finances, business transactions and charitable donations from being publicly traceable. The department noted that privacy tools can coexist with compliance if designed appropriately, such as 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 consumer spending habits,” the Treasury Department noted in the report.
These mixers, which obscure the origin and destination of digital asset transactions by pooling users’ funds together, have long caused controversy in Washington. In 2022, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) blacklisted Ethereum-based mixer Tornado Cash, accusing it of helping launder billions of dollars in illegal cryptocurrencies linked to North Korea’s Lazarus hacking group. The sanctions effectively banned Americans from using the tool and sparked one of the most contentious regulatory battles in the cryptocurrency space.
In 2025, the government removed Tornado Cash from the list after legal challenges and appeals court rulings questioned the Treasury Department’s authority to impose sanctions on open-source smart contracts. Despite being released on bail, Tornado Cash co-founder and developer Roman Storm still faces legal troubles as prosecutors claim they have enough evidence to prove he built features into the mixer knowing they would help cybercriminals.
The report does not abandon concerns about illicit finance. It highlights mixers as tools often used to conceal stolen funds and the need for stronger anti-money laundering (AML) controls on digital assets. But it also noted that privacy technology itself is not inherently illegal.
Adding to the mix, the report also heralds a broader policy shift. The Treasury Department encourages Congress to clarify which decentralized finance (DeFi) participants should be subject to anti-money laundering obligations, explore digital identity tools that enable compliance without collecting excessive data, and consider establishing new authorities that would allow institutions to temporarily freeze suspicious digital assets.