Crypto investment firm Paradigm published a nuanced legal argument amid concerns of potential sanctions by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) that would target blockchain base layer participants such as miners and validators.
The post was published on Thursday and comes on the heels of a lawsuit filed by users who believe OFAC exceeded its authority when it sanctioned Tornado Cash smart contract addresses last month.
Paradigm acknowledged that sanctions can be an important tool to preserve national security, but said it believes base layer participants merely record and order data (which may include sanctioned addresses), but do not actively control sanctioned assets. Paradigm further suggested that stringent regulation would eventually push blockchain innovation offshore, making it more difficult to track crypto transactions for legitimate national security purposes.
Paradigm explained that a blockchain “base layer” is essentially a “...
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