A month after adding Tornado Cash to its sanctions list for the first time, the Treasury Department has admitted that the protocol is used by more than just hackers.
The Treasury Department of the United States has finally replied to some of the concerns highlighted by the Tornado Cash prohibition.
Today, the Treasury’s website was updated with explanations about the August 8 penalties imposed against Tornado Cash. The new recommendations largely address the concerns of law-abiding U.S. individuals about protocol interaction.
Tornado Cash is an Ethereum-based privacy technology that enables users to conceal their blockchain transactions. On August 8, the Office of Foreign Assets Control (OFAC) added the protocol to its sanctions list, citing the platform’s use with money launderers, cyber criminals, and North Korean hacker syndicates such as Lazarus Group. Circle, Github, Infura, and Alchemy were among the first to block Ethereum addresses that have dealt with Tornado Cash, and major exchanges like Coinbase and Kraken followed suit shortly afterwards.
According to the new guidelines, U.S. residents who started trading with Tornado Cash before August 8 and did not remove their assets prior to the sanctions announcement may now be required to get a license from OFAC in order to re-engage with the protocol and unblock their accounts. Users will be asked to disclose wallet addresses, transaction hashes, time stamps, and currency amounts. OFAC said it would have a “favourable licensing policy,” suggesting the government would likely streamline the application procedure.
Additionally, the Treasury addressed the problem of “dusting.” Because crypto wallets cannot prohibit incoming flows, malicious actors may transmit cryptocurrency from Tornado Cash to the wallets of other users.
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