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- Swan co-founder Yan Pritzker said the firm is pro-privacy and doesn’t oppose customers’ use of such services, but to work, it has to follow FinCEN regulations.
Bitcoin services platform Swan Bitcoin warned its customers that it would be forced to terminate accounts found interacting with crypto-mixing due to the regulatory obligations of its partner banks.
Customers were informed about the policy in a letter suggesting the changes are due to the United States Financial Crimes Enforcement Network (FinCEN) proposed rule establishing new responsibilities on firms processing transactions from mixing services.
On Nov. 12, the co-founder of the firm, Yan Pritzker, took to X (formerly Twitter) to explain that although the firm is not against the use of privacy mixing tools and services, it has to adhere to the obligations of its partner banking institutions.
Recently we announced that some of the banks and qualified custodians that Swan works with have been freezing or terminating accounts involved in mixing Bitcoin. Today I’d like to help the industry get perspective on what’s going on, and what steps we are taking to do the right…
— Yan | swan.com (@skwp) November 11, 2023
Pritzker said that the proposed FinCEN rule is poorly written and covers a huge amount of Bitcoin-related activities, such as using BTC addresses only once, mixing funds and prohibiting the use of any programmable transactions, such as on Lightning Network channels.
He added that mixing services are painted with a scary brush instead of what they are: a common way to break large amounts of Bitcoin into small ones with privacy in focus.
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Financial regulators in the U.S. have portrayed crypto-mixing services as a route for illicit activities and have sought to curb the services. Regulators have sanctioned such activities and have also prosecuted and jailed the creators of Tornado Cash. Pritzker added:
“In fact, we have written and published privacy guides that encourage mixing and promoted companies like Wasabi and Samourai. We believe that mixing is normal, privacy is not a crime, and that using unmixed Bitcoin is similar to bringing your whole paycheck to the grocery store to pay for an apple.“
Pritzker stated that the current political climate has put a lot of fear into the banking sector, with most banks simply refusing to do business with anything in crypto. Thus, for them to continue their Bitcoin on-ramp services, their custody partner has to interact with banking services governed by FinCEN regulations.
In its letter to customers, Swan Bitcoin also suggested ways such policies can be opposed and said educating the masses on Bitcoin is the first step toward that.
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