A U.S. federal appeals court has ruled against the U.S. Treasury Department's sanctions on the crypto-mixing service Tornado Cash, a significant win for the cryptocurrency sector. The court determined that the Treasury lacked the authority to sanction the technology used by Tornado Cash, which anonymizes crypto transactions. This ruling reversed a previous district court decision that supported the government’s sanctions on the alleged 'notorious' service utilized by criminals to launder funds. The court stated that the smart contracts behind Tornado Cash do not constitute property that can be sanctioned under the International Emergency Economic Powers Act, emphasizing that Congress's established statutory measures were not meant to extend to such technologies. Coinbase, among others that challenged the sanctions, celebrated the decision as a restoration of the right to use privacy-enabling protocols. The ruling highlights the complexities surrounding technology and regulation in the crypto space, reflecting on the outdated legal frameworks not accommodating modern digital realities.

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