Hamas' attacks against Israel on Oct. 7 have shifted the geopolitical landscape and triggered a looming Israeli ground assault in the Gaza Strip. Now the ripple effects are reaching the cryptocurrency industry, where they have become the U.S. Department of the Treasury's rallying cry for a crackdown on cryptocurrency anonymity services.
The Treasury's Financial Crimes Enforcement Network (FinCEN) today released a set of proposed rules that would designate foreign cryptocurrency "mixers"—services that blend users' digital funds to offer more anonymity and make them harder to trace—as money laundering tools that pose a threat to national security and would thus face new sanctions and regulations. If adopted following a 90-day period of public comment and debate, the new rules would potentially represent the broadest restrictions imposed yet on the mixing services and could make it far harder for cryptocurrency holders to put their money through the services before cashing it out at a US cryptocurrency exchange, or even at a foreign exchange that accepts U.S. customers.
While the proposed rules were almost certainly in the works long before Oct. 7, the Treasury's announcement tied the push for a change in policy directly to the use of cryptocurrency by Hamas and militant groups in Gaza.
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