Tornado Cash’s announcement that it has begun blocking addresses approved by the US Office of Foreign Assets Control (OFAC), possibly indicates the direction the cryptocurrency industry is taking with regard to regulation around the world.
Ethereum-Based Mixing Service revealed On 15 April it leveraged an oracle created by bqlockchain data company Chainalysis to access the sanctions list.
The list includes wallet addresses controlled by the North Korean-backed hacker group Lazarus, which the FBI has accused of stealing $620 million from Axi Infinity’s Ronin Network Bridge, as well as from several Russian individuals and a Russian ransomware group.
“Maintaining financial confidentiality is essential to maintaining our independence, however, it should not come at the cost of non-compliance,” Tornado Cash tweeted.
financial freedom in danger
Criticism of Tornado Cash, a tool used by crypto investors to obscure their transactions, was sharp. Privacy die-hards point to the paradox that some of Mixer’s strongest traits have always been privacy and autonomy.
,[Financial freedom] must come at the cost of complete non-compliance,” said Bruno Skvork, founder of the non-fungible token (NFT) organization RMRK. “The only way forward is maximum disobedience and that’s a really cowardly move.”
For governments, cryptocurrency is becoming too mainstream to ignore and too chaotic to ignore. Across the world, government agencies are targeting crypto investors with not only taxes but mandatory registration and full disclosure rules.
State regulation increasingly appears to be what the crypto community must pay to assimilate into the mainstream economy. This raises existential questions about the direction of the industry, in particular, whether decentralization as a tool to resist censorship is a myth.
Daniel Casamasima, CEO of banking and crypto ecosystem Pure, said, “Centralized and licensed crypto platforms will always be the reference points for the kind of balance this new industry aims to demonstrate to gain the trust of governments and regulators around the world. ” Happen[In]crypto,
“The decentralization myth could be turned into a progressive reality if dApps are prepared to comply with the directive… the question is how many of these dApps will align with regulatory scrutiny, as many see it as an insult to principles. can be seen in the form of financial freedom,” he said.
regulatory encroachment
Regulation is underway with the seemingly innocuous promise of support for innovation, but it’s unclear how heavy the government’s craze will hit investors and exchanges going forward.
Individuals operating in an insular system away from central bank and state oversight are facing new top-down demands for the industry that include closing firms and freezing accounts.
Some of the regions that have weaponized the law books to govern aspects of the use of digital assets include China, India, Malaysia, Australia, Japan, the European Union and the US.
China has banned the use and trading of bitcoin (BTC), while the US Securities and Exchange Commission has stated in the past that it considers many crypto assets to be securities and has applied security laws to wallets and exchanges where necessary. Will go
In a blog post, renowned DeFi architect Andre Cronje explained how the industry has moved beyond its pioneering autonomous fundamentalism and is now demanding regulation and protection.
“Instead of trying to fight regulatory bodies because of crypto regulation, we should try to engage and educate on regulated crypto. What should a token issuing license look like? To what should the exchange’s activities be extended?” They said.
Ethical basis for decentralized decision making
Cryptocurrency regulation is usually based around money laundering and terrorism financing. A series of robberies have not helped the crypto cause, with the victims calling for governments to wreak havoc under the guise of the Messiah.
Exchanges and other crypto service providers have cautiously welcomed the government embrace, showing a break from crypto pioneers who have maintained a cynical separation from authority.
Jonathan Cares, a member of the Luna Foundation Guard Governing Council, told Happen[In]crypto That “we are seeing a great example of successful decision making on decentralization with Tornado Cash.”
He said that decentralization was always a spectrum that included resistance to censorship at the front end, while another decentralization occurred at the back end. Keras believes that soft-touch regulation may be relevant for bringing cryptocurrency into the mainstream.
“We should not be confused whether decentralized decision-making can be leveraged from centralized services such as an oracle,” he warned. “I think it is pretty clear that a decentralized group of decision-makers can decide that there are moral or ethical limits that they do not want to be responsible for, such as allowing terrorists to commit money laundering.”
Continuing, Caras said:
“However, if this type of decision is made behind closed doors, knowing that the community has rejected the idea, it would be an example of the failure of decentralization.”
Crypto gives up its imagined autonomy
Although crypto was perceived as an anti-authority invention, where businesses are conducted peer-to-peer without any business, the lack of internal controls, requiring users to use their discretion, can be used to protect those with criminal motives. exploited by the people.
For example, hackers have stolen more than $1.22 billion from the decentralized finance (DeFi) market this year alone. In the crypto universe, it all bundles up into an unarmed pretext for state control.
However, the current direction of crypto, as mapped out by government regulators, is a far cry from the whitepaper of Bitcoin founder Satoshi Nakamoto, which declared:
“There is a need for an electronic payment system based on cryptographic proof of trust, rather than trust, which allows any two interested parties to transact directly with each other without the need for a trusted third party.”
Third parties are now fully immersed in the crypto ecosystem, which some industry players are calmly rationalizing as a coming-of-age stage for the digital asset economy.
As the cryptocurrency industry matures, it is becoming increasingly embroiled in tax policies and institutional oversight that significantly erodes its envisioned autonomy.