27 Jan 2022 · 3 min read

US Community on Alert over Draft Law that Could Give Treasury Sweeping Powers over Crypto

Source: AdobeStock / Bill Perry

 

Crypto-advocating lawyers and pro-crypto pressure groups are gearing up for a fresh fight in Washington – as another piece of legislation that could potentially restrict the sector’s ability to grow has appeared on the political landscape. However, one influential lawyer has claimed that the crypto community should “not lose any sleep” over the matter.

Last year, the crypto community attempted to fight back against a clause in the infrastructure bill that sought to classify crypto sector participants such as miners and developers as “brokers.” But now, the head of Coin Center Jerry Brito warned on Twitter, a new piece of draft law named the America COMPETES Act contains clauses that are potentially “disastrous for cryptocurrency.”

The section of the bill was put forward by the Democratic Party Congressman Jim Himes, who, per an official release, has suggested that authorities should “streamline the process by which special measures may be introduced” and “modernize the authorities granted to the [regulatory] Financial Crimes Enforcement Network (FinCEN).”

Specifically, he explained that the FinCEN, if his proposal were made law, would allow the agency “to pursue bad actors like those laundering the proceeds of Chinese ransomware and/or declared a Primary Money Laundering Concern due to support to North Korea’s sanctions evasion.”

The release’s authors noted that the provision was “similar to an amendment” Himes proposed to the National Defense Authorization Act for Fiscal Year 2022, which had “passed the House.”

But Brito claimed that such powers would “essentially” grant the Treasury “unchecked and unilateral power to ban exchanges and other financial institutions from engaging in cryptocurrency transactions.”

He added that allowing the Treasury to take “special measures” meant that it would be able to “require financial institutions to report information on the concern,” as well as “prohibiting” them from “maintaining accounts related to the concern.”

On Reddit, one poster wrote ominously that, should the bill pass in its original form, it would hand the Treasury Secretary Janet Yellen the power to "unilaterally ban all forms of payments and remittances that provide any sort of anonymity" - which would include crypto.

The Redditor urged action from American crypto users, writing:

“US people need to write to their representatives immediately about this. The Treasury may not choose to use it immediately or will argue it won’t be for crypto, but they will have to power to do so at any time, and that is something the space really, really does not want hanging over it.”

The Cardano (ADA) founder Charles Hoskinson called the draft bill a “dumpster fire” in a YouTube stream. He remarked:

“If this [passed], it would give [Yellen] the unilateral authority to indefinitely ban all cryptocurrencies in the United States with no public hearing – no checks and balances, no say.”

He added that if it were passed, it would enable the Treasury to “just wake up on the wrong side of the bed and say: You know, that crypto stuff is real bad. Let’s just get rid of it!’”

On Twitter, Jake Chervinsky, the Executive Vice President and Head of Policy at the Blockchain Association offered a glimmer of hope.

After initially warning that Brito “is not an alarmist by nature” – and claiming that when Brito is concerned, “you know it’s time to pay attention,” he hinted at apparent progress in the corridors of power in Washington.

But others, such as the CEO of Sino Global Capital Matthew Graham, were smarting for a political fight.

Brian Armstrong, the CEO of the crypto exchange giant Coinbase, mused:

“Where do these bad policy proposals keep coming from? The crypto community is a large constituent now (16% of Americans overall, 18% Black, 21% Hispanic).”

He urged the community to “show policymakers that it's politically unpopular draft legislation like this.”

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