Is the SEC about to ban crypto? – Crypto mode
Header image source: Bitcoinist
The war drums are raging, and the SEC is ready to take names. If before, the possibility of direct confrontation between state institutions and crypto has been only arbitrary, with the current state, the conflict is imminent.
Last Monday, the U.S. Treasury Department added Ethereum coin mixer Tornado Cash along with addresses associated with the service that fall under the classification typically used for terrorist organizations and enemies of the state.
With this move, the Treasury Department banned US citizens from using Tornado Cash, a tool that allows users to hide their cryptocurrency transactions by commingling them. As a result, the Tornado Cash website has been unavailable for three days.
Soon after the announcement, many crypto leaders described the ban as unfair and illegal. Some even went so far as to say that this is an existential threat to user privacy – perhaps the most sacred tenet of a crypto industry shaped since its earliest days by libertarian and anti-government principles.
While not everyone in the industry shared such a drastic view of the situation, most agreed that this move would trigger an escalation between hardcore crypto privacy advocates and the federal government, a development that could determine the future of crypto for years to come . .
What happens to Tornado Cash?
The service’s status as a smart contract is fundamental to the legal and ethical issues of Tornado Cash’s ban. To understand this better, let’s refer to the realm of DeFi. Like many decentralized financial protocols, Tornado Cash does not require an employee to maintain or monitor transaction activity as an automated program does.
To some analysts, the fact that no one is involved in Tornado Cash’s day-to-day operations indicates that the service is just code, meaning it has no mission or underlying intent. In other words, it is a tool that can be neither good nor bad and can be used equally well for the benefit of society or malicious activities.
This is why some see this ban as an existential threat to crypto. Before the SEC would either blacklist project founders, websites or wallet addresses, but this time the agency is going after the technology, which is unprecedented. This is the first time the software was shut down, which is unique no matter how you look at it.
Is crypto really going down?
Source: Jumpstart Magazine
Those who see Tornado Cash’s underlying neutrality as fundamental to the development of the technology fear that Monday’s decision will only be the tip of an iceberg. This actually sets a precedent for the US government to justify banning pretty much any service or product simply because it can be used for nefarious activities.
The possibility that this confrontation could soon escalate is very real, based on the rhetoric used by both sides. The government plans to double down on introducing even more restrictions, saying the only way to prevent similar incidents is to know each customer’s identity. Meanwhile, some industry leaders responded to these allegations with remarks that it is too dangerous to be an American citizen in the current environment.
So does this mean DeFi will go down first?
Well, yes and no. Take for example the upcoming project Youniverze finance, which is set to deliver a product that leverages the benefits of a centralized exchange with some DeFi features. Due to its internal design, it can identify the most cost-effective bridge or DEX with the cheapest exchange rates available.
What this means is that this project can act as a multi-chain platform with an easy-to-navigate and intuitive user experience, making DeFi more accessible. It’s hard to imagine that the US government would ban Coinbase, so at least for now, it’s safe to assume that projects like Youniverze finance are in safe territory.
What to make of it
The implications of Tornado Cash will start to ripple across the wider crypto community any day now. The industry will face a choice: comply with the law or comply with ideological commitments about security, privacy and anonymity.
Many Ethereum addresses were banned by the SEC associated with the service, and now anyone trading with these will be seen as doing business with North Korea. Considering that countless mining machines around the world approve all Ethereum transactions, if such a miner were to approve the transaction with a finance-approved address, would they have committed a crime along the lines of aiding terrorist organizations?
The answer to this question is unclear, but this week’s ban indicates that the crypto community can expect further government sanctions (fair and unfair) that violate the privacy of crypto transactions. Buckle up, folks, because this war is going to be a long one.
If you want to learn more about Youniverze Finance, visit this website.
Youniverze (YUNI)
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