Tornado Cash removed from the United States blacklist

The Dipartimento del Tesoro degli Stati Uniti has announced the removal of the cryptocurrency service Tornado Cash from its sanctions list. 

This decision comes after the ruling of the U.S. Court of Appeals in January, which determined that the immutable smart contracts of Tornado Cash cannot be considered property of foreign citizens. 

Making, in fact, the sanctions imposed by the Office of Foreign Assets Control (OFAC) invalid.  The measure had immediate repercussions on the market.

The native token of the platform, Tornado Cash (TORN), recorded an increase of 60% following the news, reaching a market capitalization of approximately 73 million dollars, with a fully diluted value close to 140 million dollars.  

United States news: the context of the removal of Tornado Cash from the blacklist  

Tornado Cash is a cryptocurrency mixer, a platform that allows users to maintain privacy on their cryptocurrency transactions.

In 2022, the United States Treasury had placed Tornado Cash on its sanctions list, justifying the decision with the alleged use of the platform by criminal groups and organizations for money laundering.  

The OFAC, the Treasury office responsible for managing economic and commercial sanctions, had frozen several addresses associated with Tornado Cash on the blockchain of Ethereum, officially preventing Americans from interacting with them.

However, the decision was contested by developers and supporters of decentralization, arguing that autonomous smart contracts cannot be considered sanctionable entities.  

The turning point came in January 2024, when a U.S. Court of Appeals ruled that Tornado Cash smart contracts are not the property of a foreign entity, therefore they do not fall within the scope of OFAC.  

According to the court’s ruling, immutable smart contracts represent only a sequence of code, without any direct control by specific individuals or groups. 

As a result, the Congresso degli Stati Uniti has not granted OFAC the authority to sanction such autonomous contracts.  

Based on this new interpretation, on March 21, 2024, the Treasury Department confirmed the removal of dozens of smart contract addresses linked to Tornado Cash from its sanctions list.

The implications of the ruling for the cryptocurrency sector  

The decision represents an important precedent for the entire world of cryptocurrencies and decentralized finance (DeFi).

The ruling could limit the scope of action of U.S. regulatory authorities in imposing sanctions on autonomous technological tools such as smart contracts.  

Industry experts emphasize how this verdict could pave the way for other decentralized platforms that operate on similar principles. 

If immutable smart contracts cannot be considered third-party property, it becomes more difficult for government institutions to directly block their use.  

On the other hand, this could raise concerns about the potential use of Tornado Cash and similar tools for illicit purposes. 

Privacy in transactions is often a controversial topic, with supporters viewing it as a fundamental right and regulators fearing it could be exploited for illegal purposes.  

The news of the removal of Tornado Cash from the sanctions list had an immediate impact on the value of the TORN token. It recorded a growth of 60%, according to data from CoinMarketCap.

Currently, TORN has a capitalization of 73 million dollars, with a fully diluted value of about 140 million dollars. 

This growth reflects the market’s optimism regarding the greater operational freedom that could follow the decision of the Court of Appeal.  

Many voices in the criptovalute e blockchain landscape have welcomed the verdict positively. Specifically, seeing it as a step forward in protecting the principles of decentralization and financial privacy.

Others, however, emphasize that the removal from the blacklist does not mean an official approval of Tornado Cash by the U.S. government. 

In fact, concerns remain open regarding the use of similar tools to circumvent financial controls and anti-money laundering (AML) regulations.  

The future of regulation on decentralized finance  

The annulment of sanctions against Tornado Cash could also influence other DeFi platforms in the future. 

The regulatory agencies might review their approach towards autonomous technological tools like smart contracts. This could lead to new strategies for risk control and management.

However, this decision also demonstrates how difficult it is to regulate the blockchain sector without hindering innovation or limiting users’ rights to privacy in financial transactions.  

It will be crucial to observe the reactions of government authorities and how regulations will evolve in response to this important legal precedent. 
At the same time, companies and developers involved in decentralized finance will need to closely monitor future decisions by OFAC and other regulatory bodies to avoid new restrictions or legal disputes.