Will Bitcoin mixers be considered illegal by worldwide governments?

[Abiky]

you're right, but the market is in a transitional state because decentralized tumbling methods don't always have adequate liquidity---cashshuffle in particular. someone looking to do high volume tumbling might use coinjoins in addition to multiple centralized mixers.

i'm excited for schnorr signature aggregation because it'll create new economic incentives (fee savings) for people to participate in coinjoins.

Exactly. That's the only limitation of decentralized mixing services where there's not enough liquidity to perform the desired operations. This also happens with decentralized exchanges, which explains why most people prefer centralized alternatives. In the bright side, the solutions are there for anyone to make use of within any point in time. With enough liquidity, people can mix their coins with ease achieving true censorship-resistance. Governments may try their best to take down centralized mixers (like Bestmixer), but they'll find it hard to do so with decentralized alternatives. Being at the protocol level, ensures true censorship-resistance & privacy.

I look forward for the adoption of Schnorr Signatures within the Bitcoin blockchain, as it will improve our privacy and the whole performance of the network. It'll surely attract more people into CoinJoin mixing because of the reduction in fees. With this, non-custodial mixing wallets like Wasabi and Samourai should experience a boost in mainstream adoption. In the event that every single mixer becomes illegal, people will always find a way to keep these services alive no matter what. With the decentralized and open source nature of crypto, anything's possible. Just my opinion

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[BitHodler]

This also happens with decentralized exchanges, which explains why most people prefer centralized alternatives.

I don't think it's fair to compare decentralized mixing with decentralized exchanges. The latter will not ever take off to the degree people want it to take off because most people have no problems with KYC verification.

Thousands of people have even sent their personal information in form of ID scans, utility bills and bank statements to shady ICOs just to participate in the initial token sale.

Mixing has always been a niche, especially with how most people aren't aware of how valuable their privacy is, and there is still the 'I am not a criminal so I don't have to use a mixer' sentiment amongst these folks.

[dentolas]

Large companies and governments definitely hold the control... there are always excuses that connect crypto with money laundring and such, this is so ridiculous that if we compare the global capital values of the main black markets, our modest crypto-cap will be a drop in the pond... so the fact is that crypto will be adopted because human development leaves no other way... but will it be BTC or some government crypto? that we'll see...
Concerning mixers, in essence they do not work on the task of delivering privacy, so they do not fear them... just want to put crypto-people in line and grow some FUD, same as several crypto-service companies have been shutdown all over the world

[Abiky]

I don't think it's fair to compare decentralized mixing with decentralized exchanges. The latter will not ever take off to the degree people want it to take off because most people have no problems with KYC verification.

Thousands of people have even sent their personal information in form of ID scans, utility bills and bank statements to shady ICOs just to participate in the initial token sale.

Mixing has always been a niche, especially with how most people aren't aware of how valuable their privacy is, and there is still the 'I am not a criminal so I don't have to use a mixer' sentiment amongst these folks.

That's certainly true, mate. Most people nowadays don't care about their privacy. They just want to "go with the flow" even if they have to give their utmost sensitive personal information. After all, people are mostly into crypto for the money than anything else. It's no secret that centralized exchanges and mixers are much easier to use than decentralized ones. Not to mention, their liquidity is far superior than the latter. Considering that a small portion of people are using mixers to preserve their privacy, it could be known as a niche than anything else. The most common phrase of people within the mainstream world is that they "have nothing to hide".

In case of governments, they're always looking for the way of disrupting the entire crypto industry. Centralized mixers, and exchanges have been proven to be easier targets for them since these services have the risk of a single point of failure. Whenever they see a lot of money involved in a specific service, they target it in order to damage the reputation of crypto (with the excuse that crypto is largely used for illicit activities).

Nonetheless, time will tell us whenever governments will reach a consensus to put an end to mixing services or not. The industry is still small compared with the world of Fiat. But as it grows over time in mainstream adoption, governments will attack crypto and Blockchain tech by all means necessary as they present a threat to the current economic system. Just my thoughts

[tranthidung]

I think if there is a standard law that will be followed, mixers will be considered illegal since it's the best tool to do money laundering.
Though we are fighting for our right here that mixers helps us to make our transactions anonymous and we want privacy that's why we are doing that, but the government are looking on the bad side which is the money laundering using the service of mixers.

Like the Anti Money Laundering Act or AMLA, the rules are standard so it's easy for the implementer to impose it.
Most financial service now are required to conduct KYC on their clients, and that's completely opposite to the service of mixers.

Bitcoin mixers, or crypto mixers, have nothing to do with money laundering at beginning, as same as bitcoin. When bitcoin created more than ten years ago, it was not initially used for money laundering, but over time, bad guys abuse and use bitcoin for money laundering. It is their personal approach with advantages of bitcoin transactions. Like centuries ago, gun and powder created to protect human, and not to provide a powerful tool to kill each other in national, regional conflicts, but human abuse gun and use it for terrorist attacks, clashes and so on.

If there are bitcoin mixing techniques that can provide totally private transactionsn (in fact, we have not had such perfect bitcoin mixing services, and I do believe what theymos wrote in his guide), I believe there are good people readily to use it. I don't see reasonable to make a conclusion that all users of bitcoin mixers or crypto mixers are bad ones.

Most "tumblers", like the now-defunct bestmixer.io or even ChipMixer, aren't great because they are needlessly expensive, you're trusting the service not to run away with your coins, and you're trusting the service not to keep logs. Maybe they're the best current solution for small amounts where lasting anonymity isn't mission-critical, but in most cases you shouldn't use them.

Anonymity is very difficult, especially with blockchain-based systems where so much data has to be public, but also in other areas (eg. there are several known weaknesses with Tor). You should always operate with the expectation that any anonymity system you use will eventually fail you. If you're ever confident in your anonymity, then you're wrong.
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[atjiat]

I think that we should already get used to the idea that the cryptocurrency market will not be able to remain in the shadow for too long and each country will to some extent exercise control over cryptocurrencies.  This of course will lead not only to total control of cryptocurrency in the world, but also legalizes the activities of each cryptocurrency user, which will entail the requirement to provide personal data.  Already today, almost all trading exchanges, as well as various projects require KYC to provide each user.  Nevertheless, even such exchanges are in demand, in contrast to decentralized platforms.  Thus, it can be assumed with an accuracy of 100% that there will be no anonymous transactions in the future, because they will be prosecuted, as there will always be a suspicion of their criminal identity.

[LeGaulois]

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Anonymous transactions will always exist, either by a service or by technology improvements.
Controlling and regulating are 2 different things and if you think governments can 'control' the cryptocurrencies then good luck, it's pure bullshits. The point of failure starts when the money hits the bank account but who told you Bitcoin can only be used with an exchange platform to convert it to fiats? If I choose to use BTC, it's not be patronized to tell me what I can do or not. Can they "control me" to buy x,y,z? Nope

As for regulating, it's a good excuse to collect more taxes, nothing more, and creating a legal framework is step 1. We were using Bitcoin for years without legislation. If it's about to say Bitcoin is legal, well BTC has always been legal (since nothing was saying it is)

[figmentofmyass]

As for regulating, it's a good excuse to collect more taxes, nothing more, and creating a legal framework is step 1.

there is an unfortunate byproduct though. interfacing with any centralized service is becoming increasingly risky due to all the new emphasis on AML compliance. closed accounts, frozen funds, and selective KYC scams are becoming all too common. some exchanges (like bitstamp) are beginning to go much further than traditional banks re customer due diligence.

[Herbet Fry]

It is impossible to ban. Why do people think that everything can be banned. How on earth will they prove you using a mixing service?
They can only speculate. They can prove nothing.
Government can't stop crypto. Crypto will always win and the government will always lag behind.

[Abiky]

Anonymous transactions will always exist, either by a service or by technology improvements.
Controlling and regulating are 2 different things and if you think governments can 'control' the cryptocurrencies then good luck, it's pure bullshits. The point of failure starts when the money hits the bank account but who told you Bitcoin can only be used with an exchange platform to convert it to fiats? If I choose to use BTC, it's not be patronized to tell me what I can do or not. Can they "control me" to buy x,y,z? Nope

As for regulating, it's a good excuse to collect more taxes, nothing more, and creating a legal framework is step 1. We were using Bitcoin for years without legislation. If it's about to say Bitcoin is legal, well BTC has always been legal (since nothing was saying it is)

Exactly. Despite government's best efforts, they won't be able to take down the whole crypto ecosystem by storm. That is because crypto is decentralized by design, greatly minimizing the risks of third parties. Still though, centralized crypto services providers are not exempt. I believe that current mixing services have been an easier target for governments because they're centralized in every way. In contrast, privacy-oriented cryptocurrencies like Monero and Grin haven't experience any disruptions from government actions whatsoever. Which is why, I believe that the best route towards privacy and anonymity would be via the protocol level.

This means that mixers should rely on the Blockchain network itself instead of a middleman or entity. We already have such solutions via CoinJoin-enabled wallets like Wasabi and Samourai. Even Dash has built-in mixing with its masternodes, while Monero enforces it by default. Zcash hides transaction information via the use of Zero-Knowledge Proofs, while Grin relies on Mimblewimble. With many diverse forms of privacy and anonymity, it'll become impossible for governments to put an end to this movement anytime soon. In the event that Bitcoin mixers become illegal, people will always find a way to preserve their privacy.

As for Bitcoin's legal status, it has always been legal like you've said earlier. I believe that government's discussion of Bitcoin's legality is more of an excuse in order to tax the whole crypto ecosystem. Most governments believe that crypto is used for money laundering and tax-evasion. While that's not largely the case nowadays, it's true that Bitcoin and other cryptocurrencies can be used for such purposes by criminals. But for some reason, they prefer Fiat on top of Bitcoin for many of their nefarious activities. In the end, governments will have to join the revolution or be left behind in the dust.

Nonetheless, I wouldn't worry too much about Bitcoin mixers as long as there are other alternative routes towards achieving privacy/anonymity. Whatever governments do with centralized mixers, will not disrupt the entire crypto industry. That's because most people don't even use mixers, leaving us with only a small portion of Bitcoin transactions on them. Just my opinion

[shield132]

Good question but at the same time another question rises on my mind: Are HYIPs considered illegal? Are pirate websites considered illegal? Finally what they did against it? Nothing, HYIPs are mostly registered in UK and torrent websites are run in Russia because it ignores DMCA complaints.
What if they'll ban bitcoin mixers? Of course it will turn on Tor websites, so almost no benefit over people who use mixers for bad things. Not a big catch so I think they'll keep things the way it is now.

[figmentofmyass]

In contrast, privacy-oriented cryptocurrencies like Monero and Grin haven't experience any disruptions from government actions whatsoever. Which is why, I believe that the best route towards privacy and anonymity would be via the protocol level.

centralized services are the lowest hanging fruit, but privacy coins can be targeted too---namely, by attacking liquidity/fungibility. the japanese government has been quietly pressuring exchanges to delist privacy coins as a prerequisite for license approval. in order to regain UK banking through clearbank, coinbase was required to delist zcash. privacy coins are noticeably absent from the coins binance.us is considering listing.

this won't kill privacy coins of course, but destroying market liquidity has huge negative effects on utility. this is why bitcoin is overwhelmingly still the dominant currency used on darknet markets.

[Abiky]

centralized services are the lowest hanging fruit, but privacy coins can be targeted too---namely, by attacking liquidity/fungibility. the japanese government has been quietly pressuring exchanges to delist privacy coins as a prerequisite for license approval. in order to regain UK banking through clearbank, coinbase was required to delist zcash. privacy coins are noticeably absent from the coins binance.us is considering listing.

this won't kill privacy coins of course, but destroying market liquidity has huge negative effects on utility. this is why bitcoin is overwhelmingly still the dominant currency used on darknet markets.

That's certainly true, mate. Even if governments cannot take down privacy coins in their entirety, their actions against centralized exchanges could have a negative effect over their liquidity in the long term. The more pressure there is from governments worldwide, the worse it'll be as people won't be able to trade privacy coins regularly. Of course, we still have decentralized exchanges and the upcoming atomic swaps feature from the LN. However, they don't have much liquidity compared to traditional exchanges we've been accustomed for a long time.

Given that Bitcoin is a transparent cryptocurrency by design, it's no wonder why most governments have given it the "green light". Centralized exchanges are largely dominant in the space, providing the most liquidity for Bitcoin worldwide. As long as a cryptocurrency is easy enough for governments to track down for taxation, it'll have their backing for years to come. I believe that most governments have started legalizing Bitcoin because of this reason.

As for centralized mixing services, they're just the tip of the iceberg as there are various workarounds to obfuscate Bitcoin transactions. It'll be impossible for governments to try to put an end to privacy-oriented transactions on the Bitcoin blockchain, because of the many decentralized solutions existent today. What they could only do is force developers to implement backdoors in order to allow the government to see obfuscated transactions at will. But I believe that'll never happen, as the community strives its best to protect the censorship resistance of most blockchains today.

Nonetheless, with Bestmixer being shut down by the authorities, it's only a matter of time before governments start cracking down on other services as well (like Chipmixer). Hence, the only solution to "mix" your coins safely would be via non-custodial solutions like Wasabi or Samourai. Just my thoughts

[pawanjain]

The existence for bitcoin mixers or any cryptocurrency mixers is really hard. The primary factor being that they are always in the eyes of governments and higher authorities.
For mixers to survive they will have to be regulated by central bodies which will then in turn destroy their purpose of anonymity and privacy.
So yeah, I think they will have to be run illegaly and will be considered illegal by the governments.

[BitHodler]

Nonetheless, with Bestmixer being shut down by the authorities, it's only a matter of time before governments start cracking down on other services as well (like Chipmixer). Hence, the only solution to "mix" your coins safely would be via non-custodial solutions like Wasabi or Samourai. Just my thoughts

People act like authorities just recently have started their crack down hunt, but it has been like that for a couple of years now. It's not just a matter of finding their servers, but also to have a solid case built against them.

The latter specifically is what takes authorities so long to actually raid them, even when they already know where the servers are located. In other words, many aspects come into play here.

I am quite an enthusiast of Wasabi but the liquidity isn't always there, which is why I still prefer centralized mixers over anything similar to Wasabi that's available right now. ChipMixer does its job extremely well.

[Abiky]

People act like authorities just recently have started their crack down hunt, but it has been like that for a couple of years now. It's not just a matter of finding their servers, but also to have a solid case built against them.

The latter specifically is what takes authorities so long to actually raid them, even when they already know where the servers are located. In other words, many aspects come into play here.

I am quite an enthusiast of Wasabi but the liquidity isn't always there, which is why I still prefer centralized mixers over anything similar to Wasabi that's available right now. ChipMixer does its job extremely well.

That's certainly true, mate. While liquidity for non-custodial mixing services is almost non-existent, I believe that it could improve over time as more people become concerned for their privacy. This is similar to decentralized exchanges where they have a very low liquidity compared to centralized alternatives. We just need more adoption for decentralized privacy solutions in order to effectively counterattack government's efforts. It's so easy to take down traditional mixing services because they're largely centralized. But that's not the case with decentralized alternatives as they have wide-spread support worldwide.

ChipMixer could be doing extremely well today, but this may not last for long. After all, it's still a centralized mixing service with the risk of a single point of failure. On-chain solutions would be the best way to go, in order to achieve true censorship-resistance. Once governments find out that ChipMixer allegedly laundered criminals funds (I hope that's not the case), they could easily target it in the same way they did with Bestmixer. Hence the only path towards complete privacy/anonymity would be via the use of Monero or Tor + non-custodial mixers (if you're using Bitcoin). Just my thoughts

[figmentofmyass]

ChipMixer could be doing extremely well today, but this may not last for long. After all, it's still a centralized mixing service with the risk of a single point of failure. On-chain solutions would be the best way to go, in order to achieve true censorship-resistance. Once governments find out that ChipMixer allegedly laundered criminals funds (I hope that's not the case), they could easily target it in the same way they did with Bestmixer.

bestmixer was very low hanging fruit for two reasons:
1. operated from europe, including the netherlands
2. explicitly advertised itself as a money laundering service

keeping servers in europe? that's just mind-blowing. the easiest way to get servers seized is to keep them in the USA or europe.

in truth, american authorities have never actually gone after mixers before. however, FINCEN's recently issued guidance does deem centralized mixers as MSB, so this could be a sign they will start pursuing mixers that don't comply. still, i doubt it will be easy. we're talking about entities hiding behind private registrations and shell companies, with servers in multiple countries---likely countries that don't have a MLAT with the USA. even if they get the servers, the site can be repropagated pretty easily.

[SirLancelot]

The existence for bitcoin mixers or any cryptocurrency mixers is really hard. The primary factor being that they are always in the eyes of governments and higher authorities.
For mixers to survive they will have to be regulated by central bodies which will then in turn destroy their purpose of anonymity and privacy.
So yeah, I think they will have to be run illegaly and will be considered illegal by the governments.

The chipmixer itself was developed for the purpose of creating anonymity which I usually refer to it as confusion because it blocks every means of transactions from being able to be seen. If we really want the cryptocurrency space to actually have some level of good projects and free of scammers, I am not sure that projects like this cheap mixer should be regulated.

It has its own good will though but scammer too have actually hijacked it and that is why some transaction that would have been traced easily through exchanges using kyc is being blocked by chipmixer, so regulation is needed even if it is going to defeat that objective of anonymity to an extent, we need the space to be free of scam first and we need those who are using it for scam to be exposed.

[veleten]

it depends on which way will the global legislation turn
if it stays like today with each and every country deciding for itself wherever it recognizes bitcoin or bans it  bitcoin mixers will flourish
by the way , I'm pretty sure a good part of the mixers are run by the governmental agencies
this way it is easier to monitor potential criminal transactions and if they missed an opportunity to set up or at least sponsor several mixers
means they are doing a bad job   , don't wanna give them any ideas if they don't
but if bitcoin is adopted more and more and it becomes a handful to monitor
more than sure they would either ban or control the mixers

[1Referee]

I'm pretty sure a good part of the mixers are run by the governmental agencies
this way it is easier to monitor potential criminal transactions and if they missed an opportunity to set up or at least sponsor several mixers
means they are doing a bad job 

I kinda get the idea behind that thinking, but has there been any evidence that lead you to being so sure that governments are running mixing services?

I'm not sure how they can pull something off like that, because that would mean they are financing the activities they are trying to combat, and that's an illegal act by itself. On top of that, if anyone is caught like that, the news of that will spread like wildfire and make trustless mixing become the new primary source to have coins mixed. In other words, they will shoot themselves in the foot.

I think it makes more sense to just continue their current plan of approach, which seems relatively effective given how they have forced a few mixers offline already. It's a game of patience in the end. They need all the time they have to build a case against each entity they're chasing after.