US Treasury Clarifies How To Comply With Sanctioned Crypto Mixing Service Tornado Cash – Regulation Bitcoin News

US Treasury Clarifies How To Comply With Sanctioned Crypto Mixing Service Tornado Cash – Regulation Bitcoin News

The US Treasury has answered some regulatory compliance questions regarding Tornado Cash, the recently sanctioned crypto mixer. Answers include how to withdraw cryptocurrencies or complete transactions initiated using Tornado Cash prior to its sanction, and how to deal with “dusting” transactions.

The Ministry of Finance publishes the most frequently asked questions about Tornado Cash

The US Treasury Department has answered some frequently asked questions questions Tuesday about the sanctioned cryptocurrency mixing service Tornado Cash.

August 8, Office of Foreign Assets Control (OFAC) sanctioned Ethereum-based mixer and prohibited US persons from “engaging in any transaction with Tornado Cash or its blocked assets or interests in assets”.

One of the questions concerns how to complete transactions involving Tornado Cash that were initiated prior to the sanction. In order to complete transactions or withdraw cryptocurrencies without violating US sanctions, the Treasury Department explained:

US persons or persons transacting within US jurisdiction may request special permission from OFAC to engage in transactions involving the subject virtual currency.

“U.S. Persons should be prepared to provide, at a minimum, all relevant information regarding these Tornado Cash transactions, including sender and beneficiary wallet addresses, transaction hashes, transaction date and time, and amount( e) virtual currencies”, adds the Ministry of Finance.

The second issue relates to reporting obligations on “dusting” transactions. Treasury noted that OFAC is aware that “certain U.S. persons may have received unsolicited and nominal amounts of virtual currency or other virtual assets from Tornado Cash, a practice commonly referred to as ‘dusting’.”

While warning that “technically, OFAC’s regulations would apply to these transactions,” the Treasury Department explained that if these dusting transactions had no other sanctions-related connection other than Tornado Cash:

OFAC will not prioritize enforcement over delayed receipt of initial freezing reports and subsequent annual frozen asset reports from such US persons.

The Treasury Department emphasized that “U.S. persons are prohibited from engaging in transactions involving Tornado Cash, including through virtual currency wallet addresses identified by OFAC.” However, the competent authority clarified:

Interacting with the open source code itself, in a way that does not involve a prohibited transaction with Tornado Cash, is not prohibited.

Attorney Jake Chervinsky shared his thoughts on OFAC’s clarification in a series of tweets. He noted that the FAQ “does not fully address the collateral damage caused by naming.” Commenting on OFAC’s requirement that “each person submit their own license application,” Chervinsky said, “That should not be necessary: ​​US persons should not be ‘applying’ for their money.”

As for the dust-up, he said, since victims are required to file initial blocking reports and subsequent annual reports, “enforcement remains on the table if those reports are late.” The lawyer emphasized:

Prioritizing prosecutions is not enough: OFAC should not consider prosecuting victims at all.

Following the Tornado Cash sanction, Coin Center, a nonprofit organization focused on the policy issues facing cryptocurrencies, said that OFAC exceeded his legal authority.

What do you think of the Treasury’s clarification regarding the Tornado Cash mixer? Let us know in the comments section below.

US Treasury Clarifies How To Comply With Sanctioned Crypto Mixing Service Tornado Cash – Regulation Bitcoin News

Kevin Helms

An Austrian economics student, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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