US Treasury Clarifies How to Comply With Regulations on Sanctioned Crypto Mixing Service Tornado Cash

The U.S. Department of the Treasury answered questions about regulatory compliance in relation to Tornado Cash, which is a recently sanctioned cryptocurrency mixer. These answers cover how to withdraw crypto, complete transactions using Tornado Cash before its sanction, and how to deal "dusting" transactions.

Treasury Department Publishes Tornado Cash FAQs

Tuesday's frequently asked questions were answered by the U.S. Department of the Treasury about the sanctioned cryptocurrency-mixing service Tornado Cash.

The Treasury's Office of Foreign Assets Control sanctioned the Ethereum-based mixer on Aug. 8 and banned U.S. citizens from "engaging with any transaction using Tornado Cash or its restricted property or interests in property."

One question concerns the ability to execute transactions involving Tornado cash that were completed prior to the sanction. The Treasury Department provided the following explanations:

U.S. citizens or persons who conduct transactions in the U.S. may apply for a license from OFAC to use virtual currencies.

"U.S. "U.S.

Another question concerns reporting obligations for "dusting" transactions. The Treasury stated that the OFAC was aware that certain U.S. citizens may have received unrequested and nominal amounts from Tornado Cash. This practice is commonly known as "dusting". '"

Although the Treasury cautioned that technically, OFAC's regulations would be applicable to these transactions, it explained that if these dusting transactions do not have any other sanctions nexus than Tornado Cash:

OFAC will not prioritise enforcement against delayed receipts of initial blocking reports or subsequent annual reports on blocked property from such U.S. citizens.

The Treasury stated that the U.S. The Treasury stated that transactions involving Tornado cash are not allowed to be conducted by individuals, even through virtual currency wallet addresses identified by OFAC. However, the authority clarified:

It is permissible to interact with open-source code without involving Tornado Cash.

Jake Chervinsky, a lawyer, shared his views on the clarification by OFAC in a series tweets. He pointed out that the FAQs didn't address the collateral harm caused by the designation. Chervinsky shared his thoughts on the OFAC's clarification in a series of tweets.

He said that dusting is a matter of urgency because victims must file annual reports and initial blocking reports. "Enforcement remains on-the-table if these reports are delayed," he stated.

It's not enough to deprioritize prosecution: OFAC should not consider prosecuting victims.

Coin Center, an organization that focuses on policy issues related to cryptocurrencies, has sanctioned Tornado Cash.

What did you think of the Treasury's clarification about Tornado Cash, the mixing service? Comment below.

By: Kevin Helms
Title: US Treasury Clarifies How to Comply With Regulations on Sanctioned Crypto Mixing Service Tornado Cash
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Published Date: Sat, 17 Sep 2022 01:00:06 +0000

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