US Treasury’s March 2026 GENIUS Act report acknowledges crypto mixer privacy uses while pushing a “hold law” and tighter DeFi AML rules for Congress.
The U.S. Treasury Department just flipped its script on crypto mixers. The agency that sanctioned Tornado Cash in 2022 now formally tells Congress that lawful users have genuine reasons to use them.
The 32-page report arrived roughly seven weeks past its January 14 deadline. It was submitted under Section 9 of the GENIUS Act, signed into law in July 2025, which gave Treasury 180 days to deliver. Over 220 public comments were reviewed before finalization. The document covers illicit finance risks tied to digital assets but lands somewhere lawmakers probably did not expect.
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Privacy First? Washington Says Yes and No
Treasury’s report stated that lawful digital asset users may turn to mixers to protect financial privacy on public blockchains. Shielding personal wealth, business payments, or charitable donations were listed as examples.
That is a notable departure from years of enforcement posture. Treasury lifted its Tornado Cash sanctions in March 2025 after a federal appeals court ruled that OFAC had overstepped. But in August 2025, a Manhattan jury still found Tornado Cash co-founder Roman Storm guilty of operating an unlicensed money transmitter. Washington acknowledges legitimate use. Still hands down a criminal conviction. Both things true at once.
The report drew a line between custodial and non-custodial mixers. Custodial services take temporary control of user funds and can be required to produce identifying information. Non-custodial, decentralized mixers operate without a central party. Treasury flagged the non-custodial type as the higher-risk category.
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The data runs deep. Since May 2020, over $1.6 billion in deposits from mixing services flowed into crypto bridges. More than $900 million went to a single bridge that faced scrutiny for failing to stop swaps tied to North Korean actors.
Stablecoin deposits into mixers for illicit use appear low in isolation. Bad actors instead route other digital assets through a mixer first, then swap into stablecoins to cut the tracing link before converting to fiat.
A “Hold Law,” DeFi Gaps, and What Congress Must Do
Treasury wants Congress to create a safe harbor “hold law.” It would give authorities the power to freeze suspicious digital assets. The report also pushes lawmakers to define which DeFi actors should face AML and counter-terrorism financing obligations based on their specific roles.
Beyond that, Treasury recommends an added “sixth special measure” under Section 311 of the USA PATRIOT Act. That would let Treasury block or condition certain digital asset transmittals outside normal correspondent banking channels.
The DeFi proposals touched a raw nerve. Alexander Grieve, VP of Government Affairs at Paradigm, posted warnings on X at @AlexanderGrieve flagging that the CLARITY Act lacked enough protection for open-source software developers in the U.S. His concerns mirror warnings from Galaxy Research, which cautioned that the Senate Banking Committee’s version of the legislation could mark the biggest expansion of financial surveillance authority since the Patriot Act.
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Privacy as a policy fight has drawn in broader voices. Former hedge fund manager Ray Dalio, speaking on Tucker Carlson’s show, warned that central bank digital currencies pose a serious threat to financial privacy. CBDCs, Dalio said, function as a very effective government control mechanism.
The Bigger Picture Behind the Report
The DeFi recommendations echo concerns Galaxy Research raised in January. The firm warned that expanded AML requirements could represent the biggest surveillance expansion in U.S. law since the Patriot Act.
The report lands as Congress still works through market structure legislation. The CLARITY Act, expected to complement the GENIUS Act, would hand the Commodity Futures Trading Commission jurisdiction over most digital asset types. Where mixers and privacy tools fit into that framework stays unresolved.
Treasury’s message to Congress reads like a dual warning. Mixers serve real purposes. The risks are real, too.
