The U.S. Fifth Circuit Court of Appeals has determined that the Treasury Department’s Office of Foreign Assets Control (OFAC) acted beyond its authority by sanctioning Tornado Cash’s immutable smart contracts. The court ruled that these self-executing open-source software contracts cannot be categorized as property under the International Emergency Economic Powers.
The decision underscores the challenges regulators face in addressing decentralized technology and its implications for legal and economic frameworks. The ruling highlights the necessity for more nuanced approaches in devising regulations that consider the unique nature of blockchain-based systems like Tornado Cash.
