Mark Goodwin is the director of print editorial at Bitcoin Magazine. In this interview, we discuss the US government's sanctions on Tornado Cash, the upcoming Ethereum merge, and why this is vitally important for the future of Bitcoin.

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On 24th August, the Ethereum Foundation's Protocol Support team announced the Ethereum merge is expected to take place between September 10th and September 20th. The event marks Ethereum’s shift from proof-of-work to proof-of-stake, which would eliminate mining from the network consensus mechanism.

However, major concerns are surfacing that move beyond the well-worn battle lines. There is a growing desire for the Ethereum PoW consensus to continue resulting in a network fork. But, Ethereum has effectively been co-opted by USDC and USDT stablecoins. Because these stablecoins are widely used on the network and due to the centralised nature of these stablecoins, the issuers can throw around their financial weight by deciding which fork to censor. And the organisations behind these stablecoins have shown a readiness to comply with state sanctions. What will this make Ethereum?

On the same day of the merge announcement, a Dutch judge ruled that the developer of the Tornado Cash mixing service on the Ethereum blockchain must stay in jail for 90 days as he awaits charges. What these charges will be is not necessarily clear at the moment, but it seems that authorities will tie it into hacking and money laundering schemes.

The Dutch action was coordinated with (and probably orchestrated by) the US government, which has imposed sanctions on addresses associated with Tornado Cash. The actions by the State Department are reminiscent of the original battles with cypher punks in the 1990s that resulted in the first “Code is Speech” ruling. Do they want to retest that ruling?

These events, on the face of things, reinforce the unique position of Bitcoin. But, any rejoicing would miss the existential dangers. The state may be setting a precedent to outlaw code, sending a message to developers seeking to protect privacy which is already having a chilling effect, whatever the protocol.

Could we be witnessing the development of a state-coerced digital currency?