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But “you can’t sanction this Tornado Cash smart contract” and “you can’t sanction Tornado Cash” are two very different statements, and the Fifth Circuit has said the former, not the latter. I suspect that OFAC will continue to pursue sanctions against Tornado Cash, and the question then becomes how those sanctions are imposed. I think one very real possibility is that OFAC says, “fine, if we can’t sanction the code, we’ll sanction the operators of the computers that run the code” — that is, the relays and validators that accept transactions involving the Tornado Cash service. Already, more than half of blocks added to the Ethereum blockchain are being created with relays that censor transactions involving sanctioned wallet addresses,17 by validators that have taken a cautious approach when it comes to the rather muddy water around blockchain sanctions and who can be prosecuted for violating them. Further development of these legal theories could stand to make it much more challenging, not to mention legally risky, to run an Ethereum validator. There’s also, of course, the possibility that the Treasury Department will look to Congress to clarify its authority when it comes to smart contracts. While this is certainly a crypto-friendly Congress, I’m not sure if it’s so crypto friendly that it will effectively greenlight sanctions violations so long as they happen via cryptocurrency rails. (But hey, I’ve been wrong before.)