What happens if a Bitcoin wallet is this capable?

[Vvang]

Is it possible that a BITCOIN wallet implement mixers inside the wallet itself without the government coming for that person? I have a friend who is a genius compared to the dumb me who believe this is not a good idea, I don't want to see him get into trouble that's why I asked.

He also asked why we haven't had such capable Bitcoin wallet yet, I told him about samurai wallet and what the centralised power is making them face right now, do you think that this can land my friend into big problem or it's problem free.

[Ucy]

Ofcourse it is possible if you can find ways to serve users (who will be anonymous) with verified identities.

Firstly, the users use a Decentralized KYC Application to capture and verify their identities physically or probably online without anyone but themselves having access to the ID data (or without violating their privacy rights), this means their verified data will be hidden to everyone except themselves, making them to remain anonymous.
After their identities are verified on the decentralized application, they can connect to the mixer via API and be allowed to mix their coins. If there is a future investigation of a crime address, the real ID of the user associated with the address may be de-anonymized via consensus or the IDs could be blindly known/investigated using non-human setup like AI or ZKP (zero knowledge proof)

[Antona]

Your gut is right, its a massive red flag for regulators. Wallets that built-in mixers, like Wasabi or Samourai, have faced serious legal heat. It directly touches anti-money laundering laws your friend might be a genius coder, but he's not smarter than a entire government's legal team thats a fight you dont want.

[Charles-Tim]

What is the difference between this and a centralized mixers? People are still using Coinjoin. If he wants to use it with central platforms like exchanges, that is not advisable.

Or he can use a mixer instead of Coinjoin, but mixers are centralized.

Alternatively, he can go for a decentralized exchange where bitcoin can be converted to monero and back to bitcoin.

[Taurox]

samourai wallet was basically the gold standard for bitcoin privacy and look what happened to them, they got raided by the fbi with armored vehicles and now they are sitting in federal prison as we speak, the gov hates anything they cannot track and built in mixing is like a middle finger to their entire surveillance system, your friend might be a genius at coding but is he a genius at legal defense because he will need a lot of btc for lawyers if he tries to push this into the mainstream right now, lol, dyor on the case of tornado cash too because that didn't go well either