St. Louis Fed, Report: Tornado Cash and Blockchain Privacy, A Primer for Economists and Policymakers
“We conclude that non-custodial crypto asset mixers are an interesting innovation and demonstrate the power of zero knowledge proofs. They provide honest users with the option not to share their transaction history publicly and use public blockchains similarly to other electronic payment systems.”
“Yet, the risks are real and should also not be underestimated. Some level of regulation is necessary and perfect privacy will not be possible in a regulated environment. It is crucial to regulate on- and off-ramps (including centralized on-chain protocols) and enforce AML (anti-money laundering) and CFT (combating the financing of terrorism) regulations through these intermediaries. If this is done properly, crypto asset mixers such as Tornado Cash may become an integral part of public blockchain infrastructure.”