U.S. Treasury Warns of Crypto Mixer Crackdown in New AML Report

The U.S. Department of the Treasury has issued a stark warning regarding the use of cryptocurrency mixers, highlighting them as a growing threat to financial transparency and a priority target for future enforcement actions. In its 2025 National Anti-Money Laundering (AML) Risk Assessment released on Saturday, the Treasury identified mixers as “high-risk tools” often used to launder proceeds from ransomware, darknet markets, and illicit crypto scams.

The report singles out obfuscation protocols like Tornado Cash, Railgun, and Samurai Wallet as key contributors to the rise in untraceable crypto flows. Treasury officials noted that while privacy is a valid concern for many crypto users, the unregulated and anonymous nature of mixing services poses “clear systemic risks” to financial integrity and national security.

The AML assessment comes amid growing concerns that North Korean and Russian-linked hacker groups are exploiting crypto mixers to evade sanctions and launder stolen digital assets. The report also references recent blockchain forensics showing billions in illicit funds moving through decentralized privacy protocols that lack KYC (know-your-customer) protections.

Brian Nelson, Under Secretary for Terrorism and Financial Intelligence, said the Treasury will consider “all tools available,” including secondary sanctions, civil penalties, and international coordination, to disrupt and deter the misuse of crypto mixers. He added that upcoming guidance will seek to clarify how developers, validators, and liquidity providers could be held liable if their tools facilitate criminal activity.

Privacy advocates reacted strongly to the report, arguing that mixers provide an essential layer of anonymity in a world where blockchain transactions are inherently public. Crypto policy groups warned that blanket crackdowns could drive developers and users toward even more opaque and decentralized platforms, beyond the reach of U.S. jurisdiction.

Markets were relatively calm following the announcement, although Monero (XMR) and Zcash (ZEC) saw modest declines of 3–4% amid renewed regulatory pressure. Ethereum developers also weighed in, noting that mixer protocols are just one layer of complex on-chain privacy systems, and called for a balanced approach that doesn’t stifle innovation.

The Treasury’s report is expected to shape future crypto regulation, particularly around DeFi privacy, cross-chain bridges, and layer-2 anonymity solutions. The agency is also reportedly working with FinCEN and FATF to draft stricter reporting requirements for custodial platforms and offshore exchanges that interact with mixing protocols.

While no immediate enforcement actions were announced, industry insiders believe the tone of the report suggests an incoming wave of legal challenges and investigations aimed at privacy infrastructure in the blockchain space. The full implications will likely unfold in the months ahead as regulators balance security with the decentralized ethos of crypto.