US Treasury acknowledges lawful use of Bitcoin and crypto mixers

The US Treasury has said in writing that crypto mixers are not just for criminals.In a March 2026 report to Congress under the GENIUS Act, the department said lawful users may turn to mixers to protect their financial privacy on public blockchains. Coming from the same agency that sanctioned Tornado Cash in 2022, that is a meaningful change in tone.A mixer pools crypto from many users and sends it back out, which makes it harder to trace who paid whom.That matters because most blockchains are public by design. Every transaction sits on a ledger that anyone can read, forever.The Treasury report recognizes the cost of that transparency. It says mixers can help lawful users shield transaction details tied to personal wealth, business payments, or charitable donations.The acknowledgment comes with conditions. The report says mixers should be paired with proper safeguards, such as record-keeping.The broader message is that privacy tools are not inherently illegal. According to the report, they can coexist with compliance measures.The report does not hand mixers a clean bill of health. It also documents how bad actors continue to rely on them.North Korean-linked thefts accounted for over $2.8 billion in digital asset losses between January 2024 and September 2025, according to the report. Mixers remain part of how illicit actors move stolen funds.Since May 2020, over $1.6 billion in mixer-related deposits have been routed through bridges, the tools that move crypto between blockchains.The contrast with 2022 is hard to miss. That year, the Treasury sanctioned Tornado Cash, one of the best-known mixing services, effectively cutting it off from US persons.In 2023, the government went further. It designated certain mixing services as primary money-laundering concerns.Then the legal ground shifted. The Tornado Cash sanctions were lifted in March 2025 after a ruling found that smart contracts were not considered property under certain laws.FinCEN, the Treasury's financial crimes unit, has since withdrawn two proposed rules. One targeted mixing transactions and the other targeted unhosted wallets, which are crypto wallets that users control themselves rather than through an exchange.FinCEN cited potential negative impacts on legitimate financial activities as its reason.For developers building privacy tools, a government report stating that mixers have legitimate uses gives builders a reference point when they talk to lawyers, investors, and regulators.It does not create a safe harbor, though. The report ties legitimacy to safeguards like record-keeping, which suggests compliant privacy tools will need to look different from the fully anonymous services of the past.Watch whether the record-keeping expectations in the report turn into formal guidance, and whether FinCEN returns with narrower rules after withdrawing its earlier proposals.The report was delivered under the GENIUS Act, and lawmakers now have the Treasury's own framing in hand as they weigh how privacy and anti-money laundering rules should fit together.