The NCA urged regulators to regulate crypto mixing technology, arguing that it might be used by criminals to legitimise illegal transactions.
According to a Financial Times investigation, the UK’s National Crime Agency (NCA) has urged for regulation of crypto mixing technology that conceals transactions that would otherwise be traceable on the blockchain.
Also known as “CoinJoin,” crypto mixers enable criminals to conceal the origin of cryptocurrencies by allowing various parties to contribute numerous inputs to a transaction, obscuring the transaction’s specifics of origin.
“They can be used to provide a “layering” service, churning criminal cash while concealing its origins and audit trail, similar to how a cash business can be used by criminals to legitimise cash through the banking system,” Gary Cathcart, the NCA’s head of financial investigation, said in a Tuesday interview with the Financial Times.
The NCA seeks regulation that would require mixers to adhere to anti-money laundering rules by conducting customer checks and maintaining audit trails of payments exchanged on their platforms.
In January 2021, CoinJoin usage reached a peak of 65,000 BTC ($2.5 billion), or 0.35 percent of all bitcoin transactions that month.
Crypto exchanges and wallet developers such as Wasabi have responded to crypto mixing by prohibiting CoinJoin transactions through their platforms.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.