US Treasury report acknowledges legitimate uses of crypto mixers

The United States Treasury Department acknowledged the legitimate use of mixers, which obfuscate crypto transfers to preserve user privacy, in its report to Congress on “Innovative Technologies to Counter Illicit Finance Involving Digital Assets.” 

“As consumers increase their use of digital assets for payments, individuals may want to use mixers to maintain more privacy in their consumer spending habits,” the report said. The Treasury report continued:

“Lawful users of digital assets may leverage mixers to enable financial privacy when transacting through public blockchains. For instance, individuals may use mixers to protect sensitive information on personal wealth, business payments or charitable donations from appearing on a public blockchain.”

However, the report also noted the dangers of “darknet” or non-custodial, decentralized mixers. The Treasury said that non-custodial mixers are used for money laundering or shifting illicit funds by cybercriminals, including North Korea-linked hackers.

The authors suggested that custodial mixers, centralized services that take possession of user funds during the process, could provide identifying information that could be used to track users and transaction flows. 

Privacy in crypto became a hot-button issue in 2025, as financial surveillance increases and US lawmakers attempt to impose know-your-customer (KYC) requirements on digital asset service providers and even decentralized finance (DeFi) platforms.

Related: Dash Evolution chain integrates Zcash Orchard privacy pool

DeFi leaders and seasoned investors warn about the threat to privacy

DeFi leaders and advocates sounded the alarm on ambiguous language in the Digital Asset Market Clarity Act of 2025, also known as the CLARITY bill, that could force DeFi platforms to collect identifying information from users.

The bill also lacked sufficient protections for open-source software developers in the US, according to Alexander Grieve, vice president of government affairs at crypto investment company Paradigm.

Former hedge fund manager Ray Dalio also warned that central bank digital currencies (CBDCs), onchain fiat currencies managed by a central banking institution or the government, are coming and pose a major risk to digital privacy.

In an interview with independent journalist Tucker Carlson, Dalio said CBDCs are a “very effective controlling mechanism” for the government. 

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