Swan Bitcoin to Terminate Customer Accounts Using Crypto-Mixing Services

Regulatory Obligations Lead to Account Terminations

Bitcoin service platform Swan Bitcoin has informed its customers that it will be terminating accounts that interact with crypto-mixing services. The decision comes as a result of regulatory obligations imposed by the platform's partner banks.

Financial Crimes Enforcement Network (FinCEN) Proposed Rule

In a letter to customers, Swan Bitcoin explained that the changes are necessary due to the new proposed rule by the Financial Crimes Enforcement Network (FinCEN). The rule sets out additional responsibilities for firms processing transactions from mixing services.

Adherence to Partner Banking Institutions

The co-founder of Swan Bitcoin, Yan Pritzker, clarified that while the platform is not against privacy mixing tools and services, it must comply with the obligations of its partner banks. Pritzker criticized the proposed FinCEN rule, stating that it covers a wide range of Bitcoin-related activities, including the use of BTC addresses only once, mixing funds, and prohibiting the use of any programmable transactions.

Misconceptions about Mixing Services

Pritzker emphasized that mixing services should not be stigmatized as they are simply a way to break down large amounts of Bitcoin into smaller pieces with privacy in mind. He compared using unmixed Bitcoin to bringing your entire paycheck to a grocery store to pay for an apple.

Political Climate and Fear in the Banking Sector

Pritzker noted that the current political climate has instilled fear in the banking sector, leading many banks to refuse doing business with anything related to crypto. In order to continue providing Bitcoin on-ramp services, Swan Bitcoin's custody partner must comply with FinCEN regulations governing banking services.

Opposing Such Policies

In its letter to customers, Swan Bitcoin suggested ways to oppose these policies, highlighting the importance of educating the public about Bitcoin as a first step.