US Plans to Use PATRIOT Act Against Crypto Privacy Tools
The US government is preparing to apply powerful anti-money laundering rules from the PATRIOT Act to the crypto industry. This could change how privacy, regulation, and innovation work in the sector.
The Treasury Department, through its Financial Crimes Enforcement Network (FinCEN), wants to use Section 311 of the PATRIOT Act—a tool often used to block suspected money laundering. FinCEN is drafting a rule to label crypto mixers (services that hide transaction trails) as a “primary money laundering concern.” If approved, this would let the Treasury cut them off from the US financial system, meaning banks, exchanges, and payment companies could no longer work with them.
This move would go beyond earlier actions like the 2022 ban on Tornado Cash. Under Section 311, the Treasury could blacklist not just individual services, but even whole categories of crypto transactions, including mixers, DeFi protocols, and certain wallets.
Critics argue this is an attack on crypto users’ privacy. Francis Pouliot, CEO of Bull Bitcoin, warned that the government might eventually treat any Bitcoin wallet outside of regulated exchanges as “suspicious.”
Lawmakers are also backing the Treasury. A new bill called the “Special Measures to Combat Money Laundering Act” has been reintroduced in Congress, aiming to make Section 311 rules official for crypto.
Experts say the impact could be wide. If Treasury decides certain DeFi smart contracts or platforms are risky, US companies would be forced to block them. This could isolate parts of the crypto ecosystem from the regulated economy.
Crypto advocates and civil liberties groups strongly oppose this plan. They argue that treating open-source code as criminal is unfair and harms innovation. They also warn it could violate constitutional rights of developers and users.
The government, however, says tougher measures are needed. Officials point to cases where North Korean hackers, Russian darknet markets, and ransomware groups used crypto mixers to launder money.
Still, the plan will likely face legal challenges. The Tornado Cash case is still in court, and expanding PATRIOT Act powers to decentralized finance could trigger more lawsuits.
Even so, the direction is clear: the US is moving toward stricter control over crypto privacy tools. As one report put it: “The PATRIOT Act has long been the government’s nuclear option in financial surveillance. Now, the Treasury is pointing it at crypto.”
Currently, the global crypto market cap is about $3.95 trillion.
