NCA Requires Regulation For Crypto Mixing Services


According to the head of the NCA, criminals looking to launder and clean their dirty money can benefit from crypto mixing services. The National Crime Agency (NCA) of the United Kingdom is attempting to regulate crypto mixers. This will be done in accordance with the country’s money laundering regulations.

Due to the ability to keep transactions private, crypto mixing tools are well-known in the decentralized world. In order to hide the origin of a transaction, these techniques combine many transactions. A “black box” containing hundreds of transactions from multiple wallets goes to the recipient. In addition, these tools serve to protect users’ privacy. However, they frequently face the ire of authorities since hackers and criminals use them to launder their money.

NCA’s financial investigator, Gary Cathcart, said that these transaction mixing instruments are risky. They provide criminals with an additional level of anonymity by disguising the source of the money and the audit trail.

Regarding this issue, Cathcart urged authorities to put these mixing tools under money laundering regulations. This would make sure that service providers would have to do anti-money laundering checks. Also, if they pass such regulations, service providers will need to audit transactions that go through their platforms. 

Challenges of Crypto Regulations

Monitoring and auditing money might become a time-consuming operation. The fact that these services are open-source and decentralized presents an additional challenge for regulators. A similar issue happened during the Candian Freedom trucker campaign. Nunchuck, a non-custodial wallet service provider, emphasized that they store no information on their customers. As stated, this is because of the design of decentralized technology.

In light of crypto regulations, regulators throughout the world found that crypto service providers generally comply with their rules and laws. As a result, they have made changes to their services. Some are even one step ahead in this scenario. An example of this is Wasabi, a privacy-focused wallet that offers crypto mixer services through CoinJoin. On Monday, Wasabi stated that transactions with criminal ties would be blocked.

In addition, it’s important to note that even though transactions are anonymous, you can still trace them back to the original account. You can do this with powerful analytic tools, similar to the case of Binance’s hack. For context, Binance lost more than $40 million because of this hack, not including the cashouts that happened after.