But OFAC’s action against Tornado Cash raises the stakes. Rather than sanctioning an individual or an organization tied to terrorism or drug trafficking, the agency has made it a crime for otherwise law-abiding users to use privacy-enhancing software to cover their tracks on the Ethereum blockchain.
What if OFAC similarly sanctioned one of Bitcoin’s decentralized mixing protocols? Miners operating in the U.S. or jurisdictions where Washington holds sway might have a stronger incentive to block transactions sent to or from these mixers, the way Marathon briefly censored transactions involving sanctioned entities.
This is a problem Bitcoin developers have been working on for over a decade. Not only are they improving obfuscation techniques, but they are working on ways to make it harder to distinguish between a “regular” bitcoin transaction and one that has interacted with a mixer after the fact.
‘Enforcement 40’ for 2020
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