As a seasoned researcher with a penchant for all things tech and finance, I find myself both elated and intrigued by the recent ruling of the United States Court of Appeals for the Fifth Circuit. The decision to strike down the Office of Foreign Assets Control’s (OFAC) designation of Tornado Cash is a significant stride towards clarifying the boundaries of regulatory power in the rapidly evolving world of cryptocurrencies.
In a recent decision, the U.S. Court of Appeals for the Fifth Circuit has supported the six appellants over the Office of Foreign Assets Control (OFAC) within the Treasury Department.
The court ruled that unchangeable smart contract protocols, like Tornado Cash, cannot be considered as property subject to sanctions because they are not something that can be legally possessed. Consequently, the court invalidated the 2022 designation of Tornado Cash by OFAC.
Back in 2022, I discovered that the cryptocurrency tumbling service, a tool frequently misused for illicit activities like money laundering, even by entities like North Korea, surprisingly had the approval of the Office of Foreign Assets Control (OFAC) at one point.
As a crypto investor, I found myself questioning the authority of the OFAC when it came to sanctioning Tornado Cash. The reason being, this protocol isn’t a foreign entity, individual, or tangible property – categories under which OFAC typically exercises its powers.
The court determined that the Office of Financial Control Agency (OFCA) lacks the authority to prevent unalterable smart contracts from being executed.
Although the court recognized the potential problems stemming from uncontrollable technology, it refused to engage in creating new laws through the courts, as proposed by the department.
In his social media post, Jerry Brito, the head of Coin Center, expressed that this is a significant triumph because from the start, the court has supported our viewpoint: unalterable smart contracts are not subject to sanctions.
In a recent statement, Paul Grewal, Coinbase’s chief legal officer, expressed gratitude for the Court’s thoughtful examination of this issue. Moving forward, Coinbase will persist in advocating for rules that are both clear and fair, promoting innovation not just in the US, but worldwide as well. Grewal underlined his stance against restricting open-source technology simply because a minority of users might misuse it maliciously.
Earlier this week, a district also struck down the SEC’s proposal to extend the definition of the term “dealer” to decentralized protocols and automated market makers. This was also considered to be a significant win for the cryptocurrency industry.
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2024-11-27 09:14