A Trojan Horse in the Treasury's Report on Crypto Mixers

The United States Department of the Treasury noted in its recent report to Congress that cryptocurrency mixers can have legitimate use cases.

What counts as legitimate is fairly obvious. Strictly speaking, any use is legitimate unless it is explicitly prohibited by law - and that includes the overwhelming majority of ways ordinary users actually employ mixers.

Most people are not willing to publicly disclose every expense they make and every source of income they have. Fully transparent blockchains simply do not fit well within a culture where personal privacy is considered a value. We see this firsthand at Rabbit.io, where for the past two years one of the most frequently exchanged assets has been Monero.

Private transactions are needed by a large share of cryptocurrency users, and it is frankly absurd to claim that such transactions are relevant only to criminals. Sooner or later, financial authorities were bound to acknowledge this reality.

But look at how this acknowledgment is framed.

In the very same report that admits mixers may have legitimate uses, the authors immediately pivot to warnings about the dangers of decentralized, non-custodial mixers.

In other words, regulators seem to be offering the crypto community a carefully packaged concession on mixers - but only in exchange for accepting a much more far-reaching premise: that decentralization and self-custody themselves are inherently suspicious and must be restricted.

The message effectively sounds like this:

"Fine, we are willing to soften our stance on mixers. Mixers, in principle, are not necessarily bad. But decentralized, non-custodial mixers - those are unacceptable under any circumstances."

Doesn't that look a lot like a Trojan horse?