Crypto Currency Regulatory Dilemma And Countermeasures

This article aims to explore the crypto currency regulatory dilemma and countermeasures,taking the Tornado Cash sanctions incident as an example.Tornado Cash is a mixer protocol that exists on the Ethereum chain,which exists in the form of smart contracts,and its service is to obfuscate the addresses of funds in and out by providing a mixing pool to protect the privacy and security of users.However,this anonymization also makes it difficult for regulators to track criminal activities and malicious acts,which greatly facilitates the transfer and laundering of funds from criminal activities.This article introduces the basic concepts and characteristics of crypto currency,as well as the importance of crypto currency regulation.With the popularity and development of crypto currencies,the regulation of crypto currencies has become the focus of governments and financial institutions around the world.This article analyzes how Tornado Cash works and the anonymization mechanism.The advantage of this anonymization technology is that it enables users to trade cryptocurrencies without revealing their personal identity,but it also poses regulatory challenges.The US Treasury Department’s sanctions against Tornado Cash highlight the confusion based on the lack of special legislation and coordinated regulatory bodies caused by smart contracts that cannot be completely sanctioned,decentralized stablecoins weaken sanctions,SDN lists are limited,and terminals around the sanctioned objects are not highly motivated to cooperate with each cooperation to implement sanctions.This article explores the new regulatory landscape and dilemma reflected in Tornado Cash,extending from sanctioning on-chain addresses,centralized exchanges,and other crypto currency participants with entities to on-chain smart contracts.Through the analysis of sanctions events,the policy tentacles of regulators and their regulatory style shifts are analyzed,due to the anonymity and privacy protection of on-chain mixers.If regulators cannot effectively track criminal and malicious activities,which may lead to a large number of money laundering,terrorist financing and other illegal activities using crypto currencies,this article proposes countermeasures to address these regulatory dilemmas,including the formulation of laws and regulations specifically for crypto currencies,to solve the inapplicability caused by the previous regulatory application of traditional financial regulatory laws,and provide a strong legal basis for future supervision.Coordinate regulators to solve the competition for supervisory rights of traditional financial regulators without specialized regulators,resulting in regulatory confusion caused by multiple doors.and effective regulation through international cooperation.Sort out the logic of crypto currency supervision,clarify the current status of crypto currency supervision,analyze the current regulatory challenges and propose improvement measures,so as to point out a feasible path for the effective supervision of crypto currency by regulators in various countries and international regualtors in the future.