A newly enacted U.S. law grants the president extensive authority to block access to digital assets, sparking significant debate. Critics argue the law’s broad scope could force users into regulated blockchain networks and raise concerns over privacy and control.
A newly enacted law in the United States grants the president unprecedented authority to block access to digital assets, prompting widespread concern among digital asset commentators and users. The law, which significantly extends executive powers, has been met with criticism for its potentially broad and far-reaching implications.
On June 6, Scott Johnsson, a prominent figure in the digital assets community, voiced his concerns regarding the law’s extensive reach. In a post on the social media platform X, Johnsson stated:
“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.”
Johnsson’s critique highlights fears that the law could effectively grant the president the ability to ban individual users from accessing certain digital asset protocols and smart contracts, especially those linked to foreign entities under U.S. sanctions.
Further controversy arose when an X user pointed out that Senator Mark Warner played a strategic role in enabling these new presidential powers. On June 5, the user posted about Warner’s legislative actions that facilitated the inclusion of sweeping powers within the new law.
The law defines "digital assets" in broad terms, encompassing any digital representation of value recorded on cryptographically secured distributed ledgers. This definition includes:
This broad definition potentially subjects a wide range of blockchain technologies and digital assets to executive control.
Under the new law, the president has the authority to block transactions between U.S. persons and foreign entities identified as supporting terrorist organizations. This extends to imposing stringent conditions on foreign financial institutions maintaining accounts in the U.S. if they are found facilitating such transactions.
This provision allows the president to target and block specific digital asset transactions deemed to be linked to terrorism financing or other national security threats.
Johnsson’s analysis suggests that the law’s broad applicability could compel users to migrate to Know Your Customer (KYC)-compliant and permissioned blockchain networks. This shift could limit users to regulated blockchains, reducing the anonymity and decentralization that many digital asset enthusiasts value.
Critics argue that the law could be perceived as an effort to exert greater control over digital assets under the guise of combating terrorism. The elements enabling this presidential empowerment are reportedly borrowed from the Terrorism Financing Prevention Act, introduced in December 2023. This act allows the U.S. Treasury Department to address emerging threats involving digital assets.
The introduction of this law marks a significant shift in the regulatory landscape for digital assets in the U.S. While intended to enhance national security and prevent terrorism financing, the law’s expansive powers raise questions about privacy, control, and the future of decentralized technologies.
As the law takes effect, its implementation and enforcement will be closely watched by digital asset users, financial institutions, and policymakers. The ongoing debate highlights the need for a balanced approach that addresses security concerns without stifling innovation and user autonomy in the rapidly evolving digital asset space.
In conclusion, the new U.S. law granting the president sweeping powers over digital assets represents a critical juncture for the industry. As stakeholders navigate this complex legal environment, the implications for privacy, regulation, and the future of blockchain technology will continue to unfold.
(TRISTAN GREENE, COINTELEGRAPH, 2024)