- November 15, 2023
- Posted by: [email protected]
- Category:
Swan Bitcoin, a prominent player in the Bitcoin industry, has issued a warning to its customers, notifying them about the impending termination of accounts associated with crypto-mixing services. Co-founder Yan Pritzker emphasized the company’s pro-privacy stance, expressing support for customers’ use of such services. However, the decision to enforce these measures is driven by compliance requirements with regulations laid out by the United States Financial Crimes Enforcement Network (FinCEN).
Swan Bitcoin highlighted the policy change in a letter to customers, attributing it to a proposed FinCEN rule that defines additional duties for firms processing transactions using mixing services. Yan Pritzker clarified the company’s position on privacy mixing tools, indicating that while they don’t oppose their use, they are obligated to adhere to the rules set by their partner banking institutions.
Pritzker criticized the broad scope of the proposed FinCEN rule, highlighting its impact on various Bitcoin-related activities. He pointed out that the rule poorly encompasses actions such as using BTC addresses only once, mixing funds, and restricting the use of programmable transactions, including those on Lightning Network channels. Pritzker argued that mixing services are unfairly stigmatized and, in reality, are a common method of breaking down significant amounts of Bitcoin into smaller units with an emphasis on privacy.
In a broader context, U.S. financial regulators have portrayed crypto-mixing services as potential conduits for illicit activities, leading to increased scrutiny and attempts to curtail these services. Notably, regulators have sanctioned such activities and even prosecuted the creators of services like Tornado Cash.
Despite the challenges posed by regulatory pressures, Pritzker highlighted Swan Bitcoin’s commitment to privacy, citing the company’s efforts in publishing privacy guides that advocate for mixing and endorsing companies like Wasabi and Samourai. He emphasized the normalcy of mixing transactions, asserting that privacy should not be considered a criminal act.
Pritzker acknowledged the fear prevailing in the banking sector due to the current political climate, with many banks hesitant to engage with anything related to crypto. To continue offering Bitcoin on-ramp services, Swan Bitcoin, as a custody partner, is compelled to align with banking services subject to FinCEN regulations.
Swan Bitcoin not only informed customers of the forthcoming changes but also suggested ways to oppose such regulations. The company believes that boosting knowledge about Bitcoin is the first step towards fostering change in regulatory attitudes.
