The post How the Tornado Cash ruling is a victory for crypto appeared on BitcoinEthereumNews.com.

The following is a guest article from Matthew Niemerg, co-founder of Aleph Zero. The Fifth Circuit Court of Appeals handed down a landmark ruling yesterday that could fundamentally reshape how cryptocurrency protocols are regulated. In Van Loon v. Department of Treasury, the court found that the Treasury Department’s Office of Foreign Assets Control (OFAC) exceeded its authority when it sanctioned Tornado Cash’s immutable smart contracts. The ruling hinges on a deceptively simple question: can computer code that cannot be modified or controlled be considered “property”? The appellate court’s answer was an emphatic no. Tornado Cash is a cryptocurrency anonymizing service that helps preserve privacy by pooling users’ digital assets together, making transactions harder to trace. In 2022, OFAC sanctioned it after North Korean hackers allegedly used it to launder over $455 million in stolen funds. But the court found that since Tornado Cash’s core protocols are “immutable” – meaning they cannot be changed or controlled by anyone – they don’t qualify as property that can be sanctioned under existing law. A Watershed Moment for Crypto “Because these immutable smart contracts are unchangeable and unremovable, they remain available for anyone to use,” wrote Judge Don Willett, noting that even under sanctions, “the targeted North Korean wrongdoers are not actually blocked from retrieving their assets.” This represents a watershed moment for the cryptocurrency industry. For the first time, a federal appeals court has acknowledged that certain decentralized protocols operate entirely as something completely different from traditional property or businesses. Since no one “owns” the protocols underlying email or the web, these autonomous smart contracts exist independent of any controlling entity. The implications are significant. The ruling effectively creates a safe harbor for truly decentralized protocols that cannot be modified or controlled. While OFAC can still sanction individuals and companies, it cannot sanction…

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Filed under: News - @ November 30, 2024 9:05 pm