Polygon Labs and DELV respond to FinCEN’s NPRM on CVC mixing

Polygon Labs and DELV, formerly called Element Finance, have responded to FinCEN’s proposed rule on CVC Mixing.

Polygon released an official document that outlined the entire response. The document showed the concerns of both parties regarding FinCEN’s aim of regulating CVC (Convertible Virtual Currency) mixing.

The parties claimed the new proposed regulation is impractical and overly broad. Thus, it may have a detrimental impact on the use of blockchain technology.

The definition of CVC mixing in the rule is the main issue that Polygon Labs and DELV have raised. The definition includes several activities, such as:

  • Aggregating or pooling CVC from several sources
  • Algorithmic or programmatic transaction manipulation
  • Transactions involving privacy-elevating technology

The restriction may limit innovation in the blockchain community by spanning such a broad range. This can further impede the creation of legitimate apps based on these technologies.

Polygon Labs and DELV claim that the new rule is unrealistic and would impose huge compliance expenses. The rule will compel financial institutions to collect and transmit detailed information about CVC mixing transactions.

This will be expensive and time-consuming, especially for small institutions. Moreover, a lack of clear instructions on how to find and track CVC mixing transactions will lead to inconsistent implementation and confusion.

The third major point the document touches upon is that the rule can have negative repercussions on economic prosperity and national security. If blockchain technology is hindered, the rule can force US businesses to operate at a disadvantage compared to their international competitors.

Thus, the parties have suggested an alternative approach. The parties advocate for a targeted approach, focusing on finding and prosecuting the illicit actors misusing CVC mixing for their benefit.


This will encourage collaboration between blockchain users and law enforcement to develop effective tools for detecting and tracking suspicious transactions.

The response was shared recently, so FinCEN has yet to share any response. Even then, Polygon Labs and DELV have posted a reasonable case in front of FinCEN, which is expected to entice a change in the proposed rule.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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