Swan Bitcoin, a Bitcoin (BTC) services platform, has informed its customers that it will have to terminate accounts found interacting with crypto-mixing due to regulatory obligations of its partner banks.
The customers were notified about this policy through a letter, which suggested that the United States Financial Crimes Enforcement Network (FinCEN) proposed rule was the reason for these changes, as it establishes new responsibilities on firms processing transactions from mixing services.
Yan Pritzker, the co-founder of the firm, explained on X (formerly Twitter) on Nov. 12 that while the firm is not against the use of privacy mixing tools and services, it must comply with the obligations of its partner banking institutions.
Pritzker criticized the proposed FinCEN rule, stating that it covers a wide range of Bitcoin-related activities and portrayed mixing services in a negative light. He emphasized that mixing services are a common way to break large amounts of Bitcoin into smaller ones with privacy in focus.
The U.S. financial regulators have depicted crypto-mixing services as a route for illicit activities and have taken measures to curb these services. Pritzker also expressed the belief that mixing is normal and that privacy is not a crime.
He pointed out that the current political climate has instilled fear in the banking sector, resulting in most banks refusing to do business with anything related to crypto. Therefore, for Swan Bitcoin to continue its services, its custody partner must interact with banking services governed by FinCEN regulations.
In the letter to customers, Swan Bitcoin also suggested ways to oppose such policies and emphasized the importance of educating the masses about Bitcoin.
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