The US Treasury has decided to lift sanctions on Tornado Cash. What does this mean for the cryptocurrency sector?
History of Sanctions on Tornado Cash
Tornado Cash, an Ethereum-based cryptocurrency mixer, was initially added to the OFAC sanctions list in August 2022. It was accused of helping North Korean hackers and other criminals launder billions of dollars.
Crypto Industry's Reaction and Legal Battles
The cryptocurrency industry rallied behind Tornado Cash, accusing the US Treasury of overstepping its authority. Coinbase, the leading US exchange, funded a lawsuit against the Treasury filed by several users of the mixer. The 5th U.S. Circuit Court of Appeals ruled against the Treasury in late 2024, and a Texas-based federal court sided with Tornado Cash users in January.
US Treasury's Stance
In its most recent statement, the Treasury stressed that it remains concerned about state-sponsored hacking and money laundering. However, Treasury Secretary Scott Bessent stated digital assets present enormous opportunities for Americans.
The lifting of sanctions on Tornado Cash might shift the regulatory approach in the cryptocurrency industry, emphasizing the balance between security and privacy.
