Originally published on: December 03, 2024
A recent court ruling has sent shockwaves through the crypto industry, challenging the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) for overstepping in sanctioning smart contracts linked to the popular cryptocurrency mixer Tornado Cash.
The US Court of Appeals for the Fifth Circuit ruled on Nov. 26 that OFAC had exceeded its authority by sanctioning certain Tornado Cash smart contracts in 2022, opening the door for potential policy changes in 2025 that could impact how courts handle crypto mixer addresses.
Despite this ruling, Bill Hughes, a senior counsel at Consensys, believes that OFAC still holds the power to sanction entities associated with Tornado Cash. The case is likely to move to lower courts, where lawyers can file motions for summary judgment, a process that could take several months to unfold.
With the impending inauguration of a new presidential administration under Donald Trump in 2025, there is speculation about potential shifts in Treasury Department sanctions policies regarding crypto mixers.
Coinbase CEO Brian Armstrong has also made headlines by announcing that the exchange will avoid collaborating with law firms that employ individuals who have taken anti-crypto actions during their time in government. Armstrong urged the crypto community to support firms aligned with the industry’s values, warning that backing firms with a different agenda could result in lost business.
In a related development, former SEC Commissioner Paul Atkins is reportedly the frontrunner to chair the agency under Trump’s new administration. Known for his pro-innovation stance and expertise in crypto, Atkins’s potential appointment could signal a shift in cryptocurrency regulatory oversight from the SEC to the CFTC, potentially impacting the industry significantly.
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