On November 26, 2024, the US Court of Appeals for the Fifth Circuit ruled that “immutable” smart contracts are not “property” as defined by the US Treasury Department’s Office of Foreign Assets Control (OFAC). The decision invalidates a 2022 Biden administration executive order designating “infamous” digital asset mixer Tornado Cash as a Specially Designated National (SDN) under Executive Orders (EO) 13694 and EO 13722.
While there has been much speculation about the new administration’s approach to sanctions, the Fifth Circuit’s opinion is Joseph Van Loon et al. v. Ministry of Finance represents a surprising reversal of a 2023 district court decision and deals a blow to the current administration’s ongoing regulatory efforts regarding blockchain and digital asset market participants. The ruling may force a division of the judicial district, with a separate case involving similar litigation pending before the Eleventh Circuit Van Loon The ruling represents a major victory for decentralized finance (DeFi) advocates and a rare but significant setback for OFAC’s historically broad regulatory authority.
The new ruling also spells trouble for the administrative state more broadly, citing the recent gutting of Chevron Respect for supporting his possessions.
OFAC sanctions
The International Emergency Economic Powers Act (IEEPA) allows the President, through OFAC, to take emergency action to “address any unusual and extraordinary threat to national security and foreign policy that originates in whole or in substantial part outside the United States.” States has”. , or Economy of the United States.” This includes…
