The sanctions imposed by the United States government on Tornado Cash have reignited a public debate on privacy. For many in the relatively young crypto community, such an intervention by the federal government seems groundbreaking. However, tussles between the private sector and the state on the issue of privacy are far from new and can provide compelling insights on what we might expect next for privacy in the crypto industry.
In the 1990s, Phil Zimmermann released Pretty Good Privacy (PGP), one of the first openly available public-key cryptography applications that featured end-to-end (E2E) encryption. Zimmerman’s creation prompted a criminal investigation that was eventually dropped, resulting in federal court decisions that protect encryption under the U.S. Constitution’s First Amendment. This clash on personal privacy became dubbed the “encryption wars.”
Related: Tornado Cash shows that DeFi can’t escape regulation
The encryption wars rage on today, with officials from the U.S. and other countries urging major tech companies to forgo strong E2E encryption in their products. This would permit law enforcement to access an enormous spectrum of sensitive personal data.
The crypto wars
The next chapter in the encryption wars comes from the Office of Foreign Assets Control (OFAC) sanction of Tornado Cash. The OFAC sanction represents the first outright ban on an application itself, doing away with the line between “providers of anonymizing services” and “anonymizing software providers;” a distinction drawn by another department of the Treasury, the Financial Crimes Enforcement Network (FinCEN).
I sent a letter to Treasury Secretary Yellen regarding the unprecedented sanctioning of Tornado Cash. The growing adoption of decentralized technology will certainly raise new challenges for OFAC. Nonetheless, technology is neutral and the expectation of privacy is normal.⬇️ pic.twitter.com/0aN4a4A6tb
— Tom Emmer (@RepTomEmmer) August 23, 2022
Identifying that software can be detached from an entity controlled by a group or an individual, Congressman Tom Emmer sent a letter to Treasury Secretary Janet Yellen last month requesting clarification on the sanctions. This decision marks one of the most significant clashes on privacy since Snowden exposed the National Security Agency’s mass surveillance practices.
Does history repeat or rhyme?
The sanctions bear hallmarks of when PGP was used as a vehicle to justify an outright ban on encrypting…
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