Cryptocurrency exchange Coinbase challenges the notion that cryptocurrency mixing services are exclusively employed for illegal activities, emphasizing their numerous beneficial use cases in society.
“But we do not believe this proposed NPRM is an effective regulation for two key reasons,” the report states.
Coinbase Doesn’t Oppose Crypto Mixers
In a letter to the United States Financial Crimes Enforcement Network, Coinbase rejects the notion that crypto mixers are solely employed for illegal activities.
However, Coinbase claims that the regulator only addressed its benefits in a “superficial” manner. Meanwhile, the exchange points out that the amount of illicit money passing through mixing services in 2022 was not as minimal.
Furthermore, Coinbase argues that a crypto mixer does have legitimate use cases for people wanting privacy over their transactions.
This is especially important for people who want to keep their financial transactions private. Additionally, those who fear their government is watching over citizens’ transactions may also see positive use in crypto mixers.
“There is nothing suspicious or illicit in desiring such a modicum of financial privacy from the world.”
The letter further explains that blockchain analytics data revealed that legitimate sources constituted the majority of CVC sent to mixing services in 2022.
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Furthermore, it emphasized that money laundering represented only half a percent of the total cryptocurrency transaction volume in 2021.
Coinbase Proposes Crypto Mixer Guidance
FinCEN proposed rules that would increase the scrutiny on anyone using convertible virtual currency (CVC) mixing services in the United States. Essentially, the ruling suggests that all users of mixing services are suspected of violating money laundering laws.
On the other hand, Coinbase explains that it is already maintains comprehensive record-keeping. This will only add to the amount of admin tasks that are not really essential for the exchange.
Instead, Coinbase suggests that the regulator assists crypto exchanges be more effective. Furthermore, help in identifying suspicious behavior on those using CVC mixers.
“For example, FinCEN could issue advisories, alerts, and guidance on CVC mixing trends, typologies, and indicators, along with expanded keyword searching (as FinCEN has done in many other areas).”
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