Tornado Cash ban ripples across crypto market

The U.S. Department of Treasury’s banning of cryptocurrency service, Tornado Cash, has sent shockwaves throughout the crypto market and sparked worries in crypto investors regarding the privacy of their transactions.

The decentralised protocol used by crypto owners to shroud the trail and protect the privacy of transactions was sanctioned after the U.S. Treasury said its services had been used in the laundering of cybercrime proceeds worth over $7 billion in crypto assets since 2019.

This comes as the U.S. looks to introduce a new bipartisan legislation that will deem the Commodities Futures Trading Commission (CFTC) the regulatory authority able to supervise Bitcoin and Ethereum among other crypto assets.

According to ETF Securities and 21Shares’ Weekly Crypto Monitor, the Digital Commodities Consumer Protection Act of 2022 will grant the CFTC “exclusive jurisdiction over cryptocurrency trades that meet commodities law” and the ability to introduce the new term of ‘digital commodity’ to further clarify the digital asset environment.

Several other global law enforcement processes were also launched in the last week in the wake of Tornado Cash’s ban, as the Securities and Exchange Commission (SEC) charged 11 people from Forsage, a decentralised smart contracts platform, with fraud and called the platform a “textbook pyramid scheme”.

Documents leaked to the public also showed the SEC had open cases on all U.S.-based cryptocurrency exchanges and the Cayman Islands-registered Binance.

However, this did not put a damper on the take-up of crypto, with Ethereum prices up by 4.9 per cent and a recent survey conducted by the Australian Securities and Investments Commission (ASIC) revealing cryptocurrency was the second most held asset in Australia after Australian equities.