Crypto exchanges and regulators are becoming very hostile to digital assets that have been mixed using tumbler services. If this continues, analysts are expecting a black market and “spoiled coins”.
This problem has been catapulted to the attention of many cryptocurrency observers. The US Department of Justice recently arrested software developer Larry Harmon for suspected money laundering in connection with Alpha Bay, the now extinct crypto market on the dark web.
Mixing BTC or money laundering?
Harmon was CEO of Coin Ninja’s digital currency media site. He also created BTC mixing software called Helix. The prosecutors called Helix “a money transfer business and money laundering”.
BTC mixer is one of the efforts that developers have made to improve the functionality and privacy of transactions. It includes distributing the BTC amounts and mixing them with other users who want to conceal transactions for any reason.
Although the most obvious use of a BTC mixer may be to conceal illegal activity, there are many legitimate uses at the same time. For example, if someone has received a payment at the BTC, they may want to use the coin mixing service before allocating funds for offline storage. Without this additional privacy step, anyone in the company that paid you could know the exact number of BTCs you had in your wallet.
Recent accusations of Harmon make it clear that US law enforcement agencies have coin-shuffling services in their viewfinder. As a result, it is highly likely that the authorities will require currency exchange and crypto exchange to monitor the activity of the coins and, if necessary, take appropriate action.
As BeInCrypto has previously announced, some points of sale have already restricted their offer to those who use coin mixing services. For example, Binance Singapore has blocked the selection of a user who did not answer questions about the transaction. But so far it was only an individual.
One of many crypto exchange closures
Other coin mixing services have also been abolished earlier. It therefore appears that these services will be subject to “significant” new regulations recently published by US Treasury Secretary Steven Mnuchin.
Of course, such a cryptocurrency will not disappear no matter what the regulations are about. Analysts believe the emergence of a black mixed-coin market is inevitable:
#bitcoin is antifragile. A function of its “social layer.”— BitcoinTina☣️- “TINA” #bitcoin (@BitcoinTina) February 18, 2020
The more obstacles placed in its way the stronger #bitcoin becomes.
The US risks falling significantly behind in a technological race.
Lose of reserve status will pale compared to the loss of economic power.
Others believe that such regulations risk putting the US at a disadvantage in the global crypto currency industry. Twitter BitcoinTina (@BitcoinTina) replied to the above by stating that the regulations Mnuchin suggested might cause the US to lag behind others in a “technology race”. For the analyst, this may mean a significant loss of economic power in the future.
The advent of the black market would mean a turnaround in the cryptocurrency world. I don’t dare guess if it would be a wrong turn or a good turn.