bitcoin (btc) services platform Swan bitcoin warned its clients that it would be forced to cancel accounts that interact with the cryptocurrency mix due to regulatory obligations of its partner banks.
Customers were informed about the policy in a letter suggesting the changes are due to a proposed rule by the US Financial Crimes Enforcement Network (FinCEN) that establishes new responsibilities for firms that process mixed services transactions.
On November 12, company co-founder Yan Pritzker took to X (formerly Twitter) to explain that although the company is not against the use of privacy combining tools and services, it must comply with the obligations of its partner banking institutions.
Pritzker said the proposed FinCEN rule is poorly drafted and covers a large number of bitcoin-related activities, such as using btc addresses only once, pooling funds, and prohibiting the use of programmable transactions, such as in Lightning channels. Network.
He added that mixing services are painted with a scary brush rather than what they are: a common way to split large amounts of bitcoin into small ones with privacy as a priority.
U.S. financial regulators have described cryptocurrency mixing services as a route for illicit activity and have sought to curb them. Regulators have sanctioned such activities and have also prosecuted and imprisoned the creators of Tornado Cash. Pritzker added:
“In fact, we have written and published privacy guides that encourage mixing and promote companies like Wasabi and Samourai. We believe that mixing is normal, privacy is not a crime, and that using bitcoin without mixing is similar to taking your entire salary to the supermarket to pay for an apple.”
Pritzker stated that the current political climate has created a lot of fear in the banking sector, and most banks simply refuse to do business with anything in cryptocurrencies. Therefore, in order for them to continue their bitcoin access services, their custody partner must interact with banking services governed by FinCEN regulations.
In its letter to clients, Swan bitcoin also suggested ways to oppose such policies and said that educating the masses about bitcoin is the first step towards that.
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