After years of opposition to cryptomixers, the onchain services that obfuscate digital asset transactions, the U.S. Treasury Department now says they can have legitimate privacy uses as well as their much-hyped criminal applications.
In a report related to the implementation of the Genius Act, the Treasury Department acknowledged that hybrid services can serve legitimate purposes on public blockchains. These include shielding personal finances, business transactions and charitable donations from being publicly traceable. The Department noted that privacy tools can coexist with compliance when properly designed, for example through registration or other safeguards.
“As consumers increase their use of digital assets for payments, individuals may want to use mixers to maintain more privacy around their spending habits,” the Treasury noted in the report.
The mixers, which hide the origin and destination of digital asset transactions by pooling users’ funds, have long been controversial in Washington. In 2022, the Treasury’s Office of Foreign Assets Control (OFAC) blacklisted Ethereum-based mixer Tornado Cash, accusing it of facilitating the laundering of billions in illegal crypto linked to North Korea’s Lazarus hacking group. The sanctions effectively prevented Americans from using the tool and ignited one of the most contentious regulatory battles in crypto.
In 2025, the government delisted Tornado Cash following legal challenges and an appeals court ruling that questioned the Treasury Department’s authority to impose sanctions against open source smart contracts. Although Tornado Cash has been released on bail, Tornado Cash co-founder and developer Roman Storm still faces legal trouble as prosecutors claim they have enough evidence to demonstrate he built features into the mixer knowing they would help cybercriminals.
The report does not address concerns about illicit financing. It highlights mixers as tools often used to hide stolen funds and underlines the need for stronger anti-money laundering (AML) controls across digital assets. But it also says that privacy technology itself is not illegal.
Beyond mixers, the report signals broader policy shifts. The Treasury Department is calling on Congress to clarify which decentralized finance (DeFi) actors should fall under AML obligations, explore digital identity tools that enable compliance without excessive data collection, and consider new authorities that allow institutions to temporarily freeze suspicious digital assets.
