Swan Bitcoin services platform has informed its customers that its partner banks will be forced to close accounts that interact with crypto mixing systems as part of their regulatory obligations.
Communications with customers suggest the changes are related to proposed regulation by the U.S. Financial Crimes Enforcement Network (FinCEN) that imposes new responsibilities on companies trading from hybrid services.
On November 12, company co-founder Yan Pritzker said using X (formerly Twitter): to indicate While the company is not opposed to the use of privacy jamming tools and services, it must comply with the obligations of partner banking institutions, he said.
Pritzker argued that FinCEN’s proposed rule was poorly worded and covered a large amount of Bitcoin-related activity (BitcoinSuch as using BTC addresses to process only a single transaction, mixing funds, and banning the use of programmable transactions such as Lightning Network channels.
He added that mixing services are portrayed as scary rather than being a common way to split large amounts of Bitcoin into smaller amounts with an eye on privacy.
It is clear that financial regulators in the United States want to portray crypto mixing services as a conduit for illegal activities in order to block such services. In fact, regulators sanctioned such activities and even prosecuted and imprisoned the creators of Tornado Cash. Pritzker later added:
“In fact, we have written and published privacy guides that encourage mixing and promoting companies like Wasabi and Samourai. We believe mixing is OK, privacy is not a crime, and using unmixed Bitcoin is like taking your entire paycheck to the bank at the grocery store to buy apples.”
Pritzker said the current political climate has created fear in the banking industry and most institutions are refusing to trade cryptocurrencies. Therefore, to continue providing Bitcoin services, custody partners are forced to interact with FinCEN-regulated banking services.
In its letter to customers, Swan Bitcoin also suggests how to oppose these policies and states that the first step is to educate the public about Bitcoin.
Translation by Walter Rizzo