The U.S. Department of the Treasury has lifted sanctions against Tornado Cash, effectively legalizing its use for American citizens.
History of Sanctions and Revocation
In August 2022, the U.S. Treasury imposed sanctions on Tornado Cash, accusing it of facilitating money laundering, including transactions linked to North Korea’s Lazarus Group. However, in November 2024, a federal appeals court sided with Tornado Cash users, ruling that the sanctions were inappropriate since Tornado Cash’s smart contracts do not qualify as 'property' under federal law.
Regulations and Digital Asset Innovation
Treasury Secretary Scott Bessent commented that digital assets offer substantial opportunities for innovation and value creation for Americans. He highlighted the importance of safeguarding the digital asset industry from abuse by North Korea and other illicit actors to establish U.S. leadership in financial innovation.
Legal Implications for Software Developers
Critics argued that sanctioning open-source software infringed upon free speech and technological innovation. The court ruled that only Congress, not the courts, could amend relevant laws.
The lifting of sanctions marks a significant development in the legal aspects of cryptocurrency technologies in the U.S. The court’s decision supports the right to use and develop open-source software, potentially encouraging further innovations in this field.
