UK NCA calls for tougher coin mixer regulations
Criminals who use BTC and other digital currencies often try to evade detection by using coin mixers. This week, the UK’s National Crime Agency (NCA) called for a crackdown on the technology, which it says can hide transactions that would otherwise be traceable on the blockchain.
What the NCA expects from regulation
The NCA is clearly aware of coin mixers and how they work. Gary Cathcart, head of financial investigations at the NCA, described how mixers could be used in the same way cash businesses are often used by criminals to legitimize ill-gotten gains and transfer them into the financial system.
The NCA has called for regulations that would make coin mixing services compliant with money laundering laws. This would involve performing customer checks and performing audit trails of funds within mixing platforms.
Once again the law is coming to the digital currency space
You can bet your bottom dollar that if the UK’s NCA is aware of coin mixers and the problems they pose for law enforcement, so are other similar agencies around the world. Indeed, we have already seen a high-profile arrest associated with blending technology. In early 2021, Roman Sterlingov, the alleged operator of Bitcoin Fog, was arrested in Los Angeles.
The NCA’s call for regulation to deal with coin mixers comes as no surprise to anyone who has paid attention. The crackdown on this behavior is a trend that has been in play in the digital currency space for several years now. To give just a few examples, SEC Chairman Gary Gensler has promised to end the industry’s “wild west era”, the European Union has banned anonymous trading, and many different countries have either regulated digital currencies or banned them outright.
How is the industry reacting? The general reaction is a far cry from the man-in-the-eyes rhetoric that many experience in space. Here are some recent examples to underscore this point:
- When asked to blacklist wallets associated with Canadian trucker protests, FINTRAC-authorized exchanges immediately complied.
- Digital currency lending services like BlockFi are starting to refuse “tainted coins” on their platforms.
- zkSNACKs, the company behind a privacy-focused wallet called Wasabi, said it will block certain BTC transactions from using CoinJoin.
It is becoming clear that most industry players are choosing to comply with the law rather than fight it.
Cracks appear in popular narratives as the industry changes
In addition to raising questions about the alleged “decentralization” of digital currencies and blockchains, these events show that when things come to fruition, most operators in the digital currency industry will comply with orders and demands. legal. Despite what they might say, exchange operators, wallet providers and the like will comply with all applicable laws in order to keep the gravy on track.
Predictably, this will cause some of the die-hards to ask awkward questions. After all, if it’s not decentralized, you can’t spend it anywhere, and it can be rendered useless with the stroke of a pen if it’s not outright confiscated; What is it about?
The quickest will wake up and realize that Satoshi Nakamoto’s peer-to-peer electronic payment system was never intended to facilitate drug sales, money laundering schemes or gift scams. It was never meant to be put in coin mixers to make life difficult for law enforcement. It was designed to be a fully traceable e-money that could enable occasional small scale transactions.
As the cracks in old narratives begin to appear, and the crackdown on technologies like coin-operated mixers shows that the law can and will influence space, new narratives will begin to take hold. Soon the old ones will completely disappear and the new era of utility, massive scaling, regulatory compliance, and real, legitimate use cases will take their place.
Developers, investors, and businesses in the space need to prepare for this new era and decide which blockchain to expand on accordingly.
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