Swan Issues Warning To Customers Because Of New Regulatory Policies

Swan, a Bitcoin (BTC) accumulation platform, has issued a cautionary notice over the weekend, alerting users that engaging with BTC mixing services might lead to the termination of their accounts.

The platform informed users that its banking and custodial partners would cease servicing clients directly interacting with BTC mixing services like Wasabi, Samourai, and comparable services.

New rules

Swan attributed these changes to the adjusted policies of banks and custodians, influenced by newly proposed rules provided via the United States Financial Crimes Enforcement Network (FinCEN). If implemented, these rules would mandate regulated financial institutions to report transactions when there is suspicion of involvement in transaction mixing.

This warning aligns with the increasingly stringent regulatory environment in the United States concerning crypto mixing services. Regulatory agencies and lawmakers are growing concerned about the potential of mixers to facilitate money laundering by illicit actors. FinCEN Director Andrea Gacki emphasized the critical role of mixing services in facilitating illicit activities such as funding ransomware operations and aiding criminals in concealing ill-gotten gains. 

Acting out of fear

Swan CTO and Co-founder, Yan Pritzker, expressed his lack of surprise at the stance taken by the financial institution partners in response to the proposed rules, which Swan vehemently opposes. He pointed out the prevailing fear in the banking sector due to the current political climate, with many banks refusing to engage with anything related to cryptocurrency.

He noted the necessity of using a bank or Money Services Business (MSB) to process USD in the United States, and all such financial institutions are subject to regulations by FinCEN, the Financial Action Task Force, and other unelected bodies.

Notably, a federal judge recently sided with the US Treasury in a case where Coin Center and other crypto industry advocates challenged the various sanctions levied against the Tornado Cash mixing service. The court dismissed the argument, asserting that the Treasury has the authority, under the International Emergency Economic Powers Act, to sanction any entity in which a foreigner has an interest.