Home Crypto people New Law Lets US President Block Digital Assets

New Law Lets US President Block Digital Assets

06 Jun, 2024 Crypto people

New Law Lets US President Block Digital Assets

A newly enacted law has granted the U.S. president extensive powers to restrict access to digital assets, raising significant concerns among commentators on X.

On June 6, Scott Johnsson, a leading expert in the digital assets sector, expressed his alarm over the law's expansive reach, stating:

“It’s hard to see how this isn’t intended to be a user-level ban power by the President on any protocol/smart contract that’s deemed by the Treasury Secretary to be “controlled, operated or [made] available” by a foreign sanctions violator.

Breathtaking scope and implications to corral users to KYC/permissioned chains.”

The day before, an X user highlighted a strategic move by Senator Mark Warner to insert key provisions in the legislation that expanded presidential authority over digital assets.

The law broadly defines "digital assets" to include any digital representation of value that is recorded on cryptographically secured distributed ledgers or similar technologies.

This encompasses “[...] any communication protocol, smart contract, or other software [...] deployed through the use of distributed ledger or similar technology; and [...] that provides a mechanism for users to interact and agree to the terms of a trade for digital assets.”

Under this law, the president has the authority to prevent transactions between U.S. citizens and foreign entities linked to terrorist activities.

This includes imposing stringent requirements on foreign banks that hold accounts in the U.S. if they facilitate such transactions.

“[...] prohibit any transactions between any person subject to the jurisdiction of the United States and a foreign digital asset transaction facilitator identified under paragraph (1).”

Johnsson believes that the law could drive users towards networks that comply with Know Your Customer (KYC) regulations and are permissioned, effectively confining them to regulated blockchain environments.

He views this development as potentially a maneuver to increase governmental control over digital assets, ostensibly to counter terrorism.

The provisions that enabled this expansion of presidential power are said to have been inspired by the Terrorism Financing Prevention Act, announced in December 2023, which allows the U.S. Treasury Department to target "emerging threats involving digital assets."

Sources:

https://cointelegraph.com/news/new-us-law-block-digital-assets

https://x.com/SGJohnsson/status/1798573154920476755

https://x.com/blockchaintpsht/status/1798453680586244395

https://www.congress.gov/bill/118th-congress/senate-bill/4443/text

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