TLDR
- The Fifth Circuit's judgment regarding immutable smart contracts ruled in favor of Tornado Cash, reinforcing their exemption from being sanctioned as property.
- Following the court's announcement, TORN token experienced a massive climb of over 380%, peaking near $35 before stabilizing at $17.17.
- Post-verdict, the DeFi market cap shot up by 8.2% in a day and 21.5% over the week.
- Prominent DeFi tokens such as Uniswap, Aave, and Ethena climbed to highs not seen for several months.
- Despite the ruling's positive outcome, Tornado Cash developer Alexey Pertsev continues to be detained.
In a game-changing verdict, the Fifth Circuit Court declared that immutable smart contracts fall outside the realm of property classifications and are not subject to current sanctions law, posing a direct challenge to the U.S. Treasury's prior sanctions on Tornado Cash.
The court's analysis delved into what defines autonomous blockchain software, concluding that immutable smart contracts—those that cannot be altered or controlled by any party—do not fit traditional property definitions susceptible to sanctions.
The news prompted a rapid uptick in market activity, with Tornado Cash's TORN token seeing a swift and significant price increase. TORN's price skyrocketed nearly $35 on Tuesday morning, marking a noteworthy 380% increase, and later settled at $17.17, maintaining a 382.9% boost from its initial price before the ruling.
This landmark decision catalyzed a widespread surge within the decentralized finance arena, leading to a jump in the entire DeFi market's value by 8.2% in just 24 hours and 21.5% throughout the week, as per CoinGecko's data.
Following the ruling, major DeFi protocols enjoyed considerable gains. Uniswap's UNI increased by 11%, reaching a peak of $12.50—its highest for the past eight months. Aave's AAVE and Ethena's ENA tokens rose by 8.6% and 23% respectively, both meeting fresh multi-month highs.
Ex-Coinbase CTO Balaji Srinivasan celebrated the decision online, exclaiming victories for privacy, smart contracts, and Tornado Cash, while acknowledging a setback for OFAC.
Research firm 10X Research emphasized that although this ruling doesn't condone money laundering, it sets a precedent allowing developers to release smart contract protocols without fear of sanctions if they do not collect fees.
Particularly beneficial for the Ethereum network, housing a vast majority of decentralized applications and DeFi protocols, the ruling provides clearer boundaries for what developers can create without regulatory intrusions.
Cryptocurrencies centered around privacy initially rose in price following the announcement but have since slightly eased back to around 2% gains over the past 24 hours.
The entire cryptocurrency market demonstrated resilience, with Bitcoin hitting a pinnacle of $97,360 only to scale back to $96,320, marking a 5% rise over the day.
While this verdict marks a win for advocates of blockchain privacy and innovation, it is worth noting that Alexey Pertsev, despite a favorable ruling, remains incarcerated. Previously convicted on money laundering charges by a Dutch court, his pre-trial detention was recently prolonged.
10X Research highlighted the potential long-term impacts of this decision on the DeFi landscape, especially for protocols built on the Ethereum platform.
The ruling delineates between immutable smart contracts and conventional property, potentially reshaping regulatory approaches to decentralized tech.
For developers, the judgment clarifies a path to innovate without immediate regulatory constraints, provided they ensure true immutability without imposing fees.
Investor reaction indicates a positive view of this development within the broader crypto sphere, especially for platforms prioritizing privacy and decentralized finance.
