It is nothing new for governments to oppose end-to-end encryption. This long-running dispute has recently entered its newest level with the attempt to eliminate Tornado Cash.
The United States government’s sanctions on Tornado Cash have reopened a global discourse about privacy. In the crypto world, this decision by the US government was highly appreciated. However, disagreements between both the government and the private sector about anonymity are nothing new, and they can provide context ( e.g. into what the future of secrecy in the crypto market may entail.
As the encryption tensions persist, the US and a number of other countries are pushing major web companies to leave powerful E2E encryption out of their products. This would make a vast array of sensitive personal data accessible to law enforcement.
The Office of Foreign Assets Control’s (OFAC) suspension on Tornado Cash opens the next page in the encryption warfare. Prior to the OFAC penalty, the Financial Crimes Enforcement Network, a distinct Treasury department, established a distinction between “suppliers of anonymizing services” and “anonymizing software providers.” Nevertheless, the OFAC sanction completely abolishes that distinction (FinCEN).
Representative Tom Emmer addressed Treasury Secretary Janet Yellen last month to seek clarity on the sanctions, citing the fact that software can be detached from a business that is managed by a group or a person. Since Edward Snowden revealed the bulk monitoring methods used by the National Security Agency, this decision represents one of the most important privacy conflicts.
Tornado Cash sanction leads to online innovation
The sanctions are evocative of times when PGP was used as a justification for a total ban on data encryption. It’s a good thing that the prohibition ultimately failed since it sparked online innovation like internet shopping, private messaging, and encrypted logins. In a similar vein, maintaining the sanctions on Tornado Cash sets a perilous precedent that will smother technology advancements and any related economic development behind a mountain of bureaucracy.