In a landmark decision that signals a major shift in crypto regulation, the US Treasury has officially removed Tornado Cash from its sanctions list, marking a significant victory for privacy advocates and the broader cryptocurrency industry.
Key Takeaways from the Tornado Cash Delisting
- Removal from SDN list after 2022 sanctions
- Court ruled smart contracts don’t qualify as ‘property’ under IEEPA
- Over $455M in stolen crypto allegedly laundered through platform
- Treasury acknowledges need to balance innovation and security
The delisting follows another major regulatory victory for the crypto industry, where the SEC recently clarified that Bitcoin mining does not constitute a security.
Understanding the Legal Precedent
The November appellate court ruling that led to this decision establishes a crucial precedent for how smart contract protocols may be regulated in the future. The court’s determination that immutable blockchain code cannot be classified as property under IEEPA creates new parameters for regulatory oversight.
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Impact on DeFi Privacy Tools
While the sanctions removal represents a victory for privacy advocates, significant challenges remain:
- Ongoing criminal cases against developers
- Continued platform usage by malicious actors
- Need for balanced regulation of privacy tools
Industry Reactions and Future Implications
Coinbase’s celebration of this decision as a “historic win” reflects broader industry sentiment about the importance of protecting innovation while addressing legitimate security concerns. The Treasury’s revised stance may influence future regulatory approaches to DeFi privacy tools.
FAQ Section
What does this mean for other privacy protocols?
The ruling sets a precedent that could protect other privacy-focused protocols from similar sanctions, provided they operate as immutable smart contracts.
Can Tornado Cash be used normally now?
While sanctions are lifted, users should exercise caution and comply with relevant AML/KYC requirements where applicable.
What happens to the pending legal cases?
Criminal proceedings against individuals like Roman Storm and Alexey Pertsev will continue independently of the sanctions removal.