Law Decoded, Aug. 8-15: In the eye of Tornado Cash

Regulation

Summer is still on, harvesting the fresh names for its list of the crypto companies in deep trouble. This time, the trouble came not from the market or management but from the United States Treasury Department. The regulator has added more than 40 cryptocurrency addresses allegedly connected to crypto mixer Tornado Cash to the Specially Designated Nationals list. These individuals and groups allegedly laundered more than $7 billion worth of cryptocurrency. 

Accusations like this don’t come easy — one of the co-founders of Tornado Cash has reported his account suspended at GitHub, while the issuer of the USD Coin (USDC) stablecoin, Circle, froze over 75,000 USDC worth of funds linked to the problematic addresses. By the end of last week, Dutch Fiscal Information and Investigation Service arrested a 29-year-old developer suspected of being involved in money laundering.

The enforcers’ activity has not been taken with a light heart by the industry. Figures like Jake Chervinsky and Jerry Brito criticized the Treasury Department for acting against the tool instead of punishing the concrete individuals. Someone even started a prank campaign, making transactions from Tornado Cash’s smart contract addresses to celebrities such as Coinbase CEO Brian Armstrong and American television host Jimmy Fallon.

Digital ruble might be rolled out by 2024

The Bank of Russia continues working toward the upcoming adoption of the central bank digital currency (CBDC), planning an official digital ruble rollout in a few years. The authority will begin to connect all banks and credit institutions to the digital ruble platform in 2024, a year when the country is expected to hold presidential elections. The central bank also expects to introduce the offline mode for the digital ruble by 2025 alongside the integration of non-bank financial intermediaries, financial platforms and exchange infrastructure.

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Uzbekistan blocks access to foreign crypto exchanges

In Uzbekistan, the recently formed crypto regulator, the National Agency of Perspective Projects, is compelling big international players to comply with the local legislation. Some crypto exchanges have found themselves blocked for Uzbeki users due to accusations of unlicensed activity. Apart from obtaining a license, they might have to deploy the servers on the territory of Uzbekistan, as the regulator hints. 

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No new crypto licenses for three years in the Philippines

While many believe that the Philippines can become a new crypto hub, that dream may be shattered in the meantime as the country’s central bank announced a three-year hiatus from accepting new virtual asset service provider (VASP) applications. The normal application window for new VASP licenses will be closed for three years, beginning on Sept. 1, 2022. However, applications that have already passed the second stage of the process before Aug. 31, 2022, will continue to the next assessment steps. 

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