US Treasury may revise Tornado Cash sanctions under Trump

The United States Treasury’s stance on Tornado Cash (CRYPTO:TORN) could shift under the Trump administration, following a recent appellate court decision.

On November 26, the U.S. Court of Appeals for the Fifth Circuit ruled that the Treasury’s Office of Foreign Assets Control (OFAC) overstepped its authority by sanctioning specific Tornado Cash smart contracts in 2022.

While the ruling does not eliminate the sanctions, it sends the case back to lower courts, where additional legal proceedings will occur.

According to Bill Hughes, Consensys’ senior counsel, this process could take months.

“I actually think under a Trump administration, it’s more likely that this opinion will be adopted as Treasury policy,” Hughes stated, though he noted that immediate changes to the sanctions are unlikely before Trump assumes office in 2025.

The Treasury initially sanctioned Tornado Cash smart contract addresses, alleging the mixer was used to launder over $7 billion, including funds linked to the North Korea-affiliated Lazarus Group.

This action faced lawsuits from Coinbase-backed plaintiffs and Coin Center, both arguing that smart contracts should not be classified as “property” subject to sanctions.

A Trump-led Treasury, potentially under the leadership of Scott Bessent, may adopt a more cautious approach to immutable smart contracts while balancing national security concerns.

The administration’s stance will likely influence ongoing prosecutions, including those against Tornado Cash co-founders Roman Storm and Alexey Pertsev.

Storm is scheduled to face trial in April 2025, with Hughes predicting calls for clemency if convicted.

Meanwhile, Pertsev is appealing a five-year sentence in the Netherlands for money laundering.

At the time of reporting, the Tornado Cash (TORN) price was $17.07.