TL;DR
- A U.S. appeals court has overturned sanctions on the crypto mixer Tornado Cash, ruling that its immutable smart contracts do not qualify as “property” under the IEEPA.
- The TORN token surged over 128% and recorded a trading volume exceeding $8.5 million following the ruling.
- The decision limits OFAC’s regulatory power over decentralized technologies and is seen as a milestone for innovation in the DeFi sector.
A U.S. appeals court has reversed the sanctions imposed by the Treasury Department on the crypto mixer Tornado Cash. This ruling sets a crucial precedent in the regulation of decentralized technologies. The decision concluded that Tornado Cash’s immutable smart contracts do not qualify as “property” under the International Emergency Economic Powers Act (IEEPA), which was the legal basis for the original sanctions.
The court argued that immutable smart contracts operate autonomously and are not subject to human control. This removes their classification as “property” under the IEEPA’s terms. Additionally, the court emphasized that such contracts remain accessible to anyone with an internet connection, regardless of imposed sanctions, reinforcing their autonomous nature.
The ruling stemmed from a lawsuit filed by a group of Tornado Cash users who argued that sanctioning software rather than an entity or individual exceeded the legal authority of the Office of Foreign Assets Control (OFAC). This decision not only restricts OFAC’s capacity to regulate decentralized technologies but also provides legal clarity regarding the use of smart contracts on blockchain platforms.
A Major Win for Tornado Cash
The news had an immediate impact on the market. Tornado Cash’s native token, TORN, saw its price rise by over 128%, reaching $18.45 per unit—a level not seen in months. Trading volume also spiked dramatically, increasing by more than 5,500% and surpassing $8.5 million. This shift could create new opportunities for the development and adoption of both the mixer and other decentralized tools.
The Future of DeFi Regulations
The decision has been celebrated within the DeFi industry as a move toward fairer and more balanced regulations. Many believe this ruling will encourage technological innovation by providing a clearer and less restrictive framework for developers and users of smart contracts. While debates over blockchain technology regulations continue, this court decision marks a turning point in discussions about software autonomy and its relationship with traditional legal frameworks
