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Why OFAC Delisted Tornado Cash

Last month, the U.S. Treasury Department’s Office of Foreign Asset Control delisted Tornado Cash from its sanctions list, months after an appeals court ruled that the watchdog could not designate the mixer’s smart contracts.
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Fair winds
The narrative
In November 2024, a Fifth Circuit Court of Appeals panel ruled that the Treasury Department’s Office of Foreign Assets Control (OFAC) couldn’t sanction smart contracts tied to crypto mixer Tornado Cash. Last month, OFAC delisted Tornado Cash entirely, though it left developer Roman Semenov on its Specially Designated Nationals list.
Why it matters
Whether Tornado Cash could be sanctioned to begin with has been a point of contention for the crypto industry. The Fifth Circuit ruling sparked a rally in the TORN token’s price and raised hopes that it would be more difficult for the U.S. government to block legal uses of mixers.
Breaking it down
Tornado Cash’s delisting included smart contract addresses and other components of the overall mixer, and followed November’s ruling. The delisting may have been an effort to preempt a court ruling that would force OFAC to permanently delist Tornado Cash.
Backing up a little: A group of developers sued OFAC after Tornado Cash was first sanctioned with backing from crypto exchange Coinbase. That case, Van Loon v. Treasury, received an initial ruling from a district court judge that was favorable to the Treasury Department. On appeal, however, the Fifth Circuit ruled — somewhat narrowly — that smart contracts were outside the scope of OFAC’s jurisdiction. The appeals court panel threw the case back down to the district court to sort out next steps.
On March 21, the same day it removed Tornado Cash from its sanctions list, OFAC filed a notice telling the court that the removal meant the legal case remedies cot «the matter is now moot.»
Peter Van Valkenburgh, the executive director at Coin Center, said the November decision left OFAC with few options.
«They could have waited for the court to invalidate the sanctions or they could have delisted them themselves, and they delisted themselves,» he said. «You can read that two ways. You can read that as ‘I want to try and preserve some ability to fight in the future or [make] some other listing,’ [and] that’s really tough because that Fifth Circuit opinion is really bad for them.»
The other read for the delisting is OFAC just wanted the matter resolved quickly, he said.
Leah Moushey, an attorney with Miller & Chevalier, said the court may choose to reject OFAC’s filing because there’s an open question as to whether Tornado Cash can be redesignated in the future. She pointed to a Supreme Court case with thematic similarities.
The court said in that case, FBI v. Fikre, that the U.S. government had not sufficiently proven that just removing an individual from a no-fly list meant he would never be placed back on the list.
OFAC may have to show in this case that Tornado Cash can’t be designated again.
Another open question for Tornado Cash is whether the delisting has any bearing on the U.S. Department of Justice’s criminal case against developer Roman Storm. After the Fifth Circuit ruling, Storm’s attorneys filed a motion asking the judge overseeing the criminal case to dismiss the indictment, but the judge has already ruled that the case should move forward.
«The judge determined that the scope of the conduct went beyond the interactions with the smart contract,» Moushey said. The Fifth Circuit ruling did not discuss Tornado Cash as an entity.
Van Valkenburgh noted that OFAC left its sanctions against Semenov in place, and the DOJ will continue to try and argue Storm conspired to violate sanctions.
The Storm case is currently set for trial in July.
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This week
Wednesday
14:00 UTC (10:00 a.m. ET) The House Financial Services Committee held a markup on the STABLE Act, Financial Technology Protection Act and the CBDC Anti-Surveillance State Act, ultimately passing all three bills — after a daylong session addressing some 40 different proposed amendments.
Thursday
14:00 UTC (10:00 a.m. ET) The Senate Banking Committee voted to advance the nominations of Securities and Exchange Commission Chair Paul Atkins and Comptroller Jonathan Gould.
Elsewhere:
(404 Media) T-Mobile offers a GPS tracker for parents to keep tabs on their children. Last week, 404 Media reports, some parents found they were unable to track their own kids but did receive the location data for other kids.
(The New York Times) The Times reported on a Ponzi scheme that used crypto promises to sucker a large number of people in an Argentinian town. These kinds of scams are very common.
(The Atlantic) The Trump administration said in a court filing it had sent an individual with protected legal status to an El Salvador prison camp without holding a hearing through an «administrative error.» A federal judge ordered the administration to bring him back to the U.S. on Friday. White House Press Secretary Karoline Leavitt responded with a statement saying «we are unaware of the judge having jurisdiction or authority over the country of El Salvador.»
(The Wall Street Journal) New Jersey Democrat Cory Booker broke the U.S. Senate record for longest floor speech after giving a marathon 25-hour address in protest of President Donald Trump’s policies.
(The New York Times) Donald Trump unveiled a whole set of tariffs on countries around the world, saying they were reciprocal against tariffs imposed by the U.S.’s trading partners. «The markets are going to boom,» Trump said in remarks.
(Yahoo! Finance) The markets «cratered on Friday,» following an equally rough Thursday.
(Wired) Among the countries and places tariffed by the U.S. is the Heard and McDonald Islands, which is uninhabited by humans and does not export goods.
(ABC News) The White House said its tariff rate against individual countries was half of those countries’ tariff rates against the U.S. Economists say the actual calculations were done by dividing a country’s trade deficit by its import value, then divided in half, ABC News reported.
(Reuters) The other effect of the renewed tariffs appears to be rising recession odds, according to a J.P. Morgan note shared by Reuters.
If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Bluesky @nikhileshde.bsky.social.
You can also join the group conversation on Telegram.
See ya’ll next week!
Uncategorized
SEC Staff to Reassess Biden-Era Crypto Guidance Amid Regulatory Shakeup

Staff at the U.S. Securities and Exchange Commission (SEC) are reviewing past crypto-related guidance to determine whether it still reflects the agency’s current priorities, according to a statement from acting chairman Mark Uyeda, posted on social media platform X.
Among several key documents, the SEC staff’s statement on funds registered under the Investment Company Act Investing in the bitcoin futures market is under review, according to the X post. Other documents include digital assets «investment contracts,» and custody frameworks. The reviews could result in more clarification for regulatory frameworks around the digital assets sector.
The request from Uyeda is related to Executive Order 14192, Unleashing Prosperity Through Deregulation and comes after a recommendation from Elon Musk’s D.O.G.E.
It is worth noting that the statement is coming from SEC staff and not from Commissioner Hester Peirce, making it less binding. However, it still shows the SEC’s willingness to ease pressure on the digital assets sector since the agency was taken over by President Donald Trump-appointed leadership.
The move is part of interim Chairman Mark Uyeda’s efforts to overhaul the regulator’s crypto position. That includes throwing out most of the prominent enforcement cases the agency had pursued against digital asset businesses.
Read more: U.S. SEC Staff Clarifies That Some Crypto Stablecoins Aren’t Securities
Uncategorized
Bitcoin Developer Proposes Hard Fork to Protect BTC From Quantum Computing Threats

Bitcoin could be headed for its most sweeping cryptographic overhaul yet if a new proposal gains traction.
A draft Bitcoin Improvement Proposal (BIP) titled Quantum-Resistant Address Migration Protocol (QRAMP) has been introduced by developer Agustin Cruz. It outlines a plan to enforce a network-wide migration of BTC from legacy wallets to ones secured by post-quantum cryptography.
Quantum computing involves moving away from a process reliant on binary code, ones and zeros, and exponentially increasing computing power by employing Quantum bits (qubits) that exist in multiple states simultaneously. Such a jump in power is expected to threaten modern computing encryption built by classic machines.
The proposal suggests that after a predetermined block height, nodes running the updated software would reject any transaction trying to spend coins from an address using ECDSA cryptography, which could theoretically make it vulnerable to quantum attacks.
A hard fork debate
Bitcoin currently relies on algorithms, including SHA-256 for mining and the Elliptic Curve Digital Signature Algorithm (ECDSA) for signatures. Per Cruz, legacy addresses that haven’t yet transacted are protected by additional layers, while those that have exposed their public keys—necessary to conduct transactions—may now be vulnerable “if sufficiently powerful quantum computers emerge.”
The move would require a hard fork, which is likely going to be a tall ask from the community. A hard fork refers to a change to a blockchain that renders an older version incompatible.
«I admire the effort but this will still leave everyone who doesn’t migrate’s coins vunerable, including Satoshi’s coins,» said one Reddit user about the new proposal.
«Bitcoin could implement a post quantum security for all coins but that would need a hard fork, which due to bitcoin’s history and the mantra repeated by maxis that would create a new coin and would not be bitcoin anymore.»
Read more: The Blocksize Wars Revisited: How Bitcoin’s Civil War Still Resonates Today
Preventive measure
The proposed solution sets a migration deadline to lock those funds unless they’re moved to a more secure wallet. This proposal isn’t a response to any imminent breakthrough in quantum computing. Instead, it’s a preventive measure, yet it comes a little over a month after Microsoft unveiled Majorana 1, a quantum processing unit designed to scale to a million qubits per chip.
During a migration window, users would still be able to move funds freely. The BIP calls for wallet developers, block explorers and “other infrastructure” to build tools and warnings to help users comply.
After the deadline, non-upgraded nodes could fork from the network if they continue accepting legacy transactions.
This is not the first time someone has suggested a mechanism to defend Bitcoin from quantum computing threats. Most recently, BTQ, a startup working to build blockchain technology that can withstand attacks from quantum computers, has proposed an alternative to the Proof of Work (PoW) algorithm involving quantum technology.
In its research paper, BTQ proposed a method called Coarse-Grained Boson Sampling (CGBS). This process uses light particles (bosons) to generate unique patterns—samples—that reflect the blockchain’s current state instead of hash-based mathematical puzzles.
However, this proposal would also require a hard fork involving miners and nodes replacing their existing ASIC-based hardware with quantum-ready infrastructure.
Read more: Quantum Startup BTQ Proposes More Energy Efficient Alternative to Crypto’s Proof of Work
Uncategorized
PayPal Pushes Further Into Crypto by Adding Chainlink and Solana as New Offerings

PayPal has added chainlink (LINK) and solana (SOL) to its growing list of supported cryptocurrencies, giving users of both PayPal and Venmo the ability to buy, hold, sell and transfer the tokens directly from their accounts.
The move reflects the payments giant’s continued push into the cryptocurrency space after first launching crypto support in 2020. The new tokens will roll out to U.S. users over the next few weeks.
“Offering more tokens on PayPal and Venmo provides users with greater flexibility, choice, and access to digital currencies,” said May Zabaneh, PayPal’s Vice President of Blockchain, Crypto, and Digital Currencies, in a press release.
The company, which has also launched its own U.S. dollar-backed stablecoin, has last year moved to allow its business clients access crypto directly form their accounts in the U.S.
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