The recent ruling by the Fifth Circuit Court has sparked optimism in the decentralized finance (DeFi) sector, particularly for Ethereum and privacy-focused tokens. The court's decision stated that immutable smart contracts cannot be classified as property and therefore cannot be sanctioned under existing laws, which is seen as a significant victory for privacy advocates. While it does not endorse illegal activities like money laundering, the ruling allows developers to create and deploy smart contracts without fear of regulatory repercussions, as long as they do not impose fees. This clarity is expected to benefit the Ethereum ecosystem, where most decentralized applications reside. Following the news, the market saw notable gains, with decentralized finance's market cap increasing by 8.2% in a single day. Prominent tokens such as Uniswap, Aave, and Ethena also experienced significant price rises. However, the ruling specifically applies to immutable smart contracts, leaving projects with upgradeable contracts still vulnerable to regulatory scrutiny. The case will return to a district court for further examination, while Tornado Cash developer Alexey Pertsev remains detained amidst ongoing legal challenges.

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