New Law Could Allow Treasury to Secretly Ban Crypto Transactions

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Key Takeaways Jerry Brito of Coin Center shared his concerns about the proposed provision in the America Competes Act. The decision aims to let the Treasury secretly ban any transaction deemed to pose a risk of money laundering. Brito says the rule could give the Treasury unchecked discretion to ban crypto transactions. Share this article

A new provision in the America Competes Act could give the US Treasury the supreme power to immediately prohibit any financial transaction associated with money laundering risks. Some experts have warned that the provision could be disastrous for the crypto industry if passed.

New move could help Treasury rein in crypto

A new proposal in the United States could have disastrous consequences for the cryptocurrency industry.

The recently introduced America Competes Act of 2022 aims to boost US semiconductor chip manufacturing and address supply chain issues. Additionally, the bill also includes a provision that could present a major regulatory hurdle for crypto.

Jerry Brito, executive director of the Washington-based crypto think tank Coin Center, sounded the alarm about the law’s “special measures” provision during a tweet storm on Wednesday.

2/ The so-called “special measures” provision (proposed by @jahimes) would essentially give the Secretary of the Treasury unchecked and unilateral power to prohibit exchanges and other financial institutions from engaging in cryptocurrency transactions. How would he do that? pic.twitter.com/f3tVow9nxA

— Jerry Brito (@jerrybrito) January 26, 2022

The provision Brito drew attention to is intended to give the Treasury the general power to prohibit any transaction related to the “risk of money laundering” without the need to comply with the controls and processes prescribed by law. in force.

The proposed rule would amend the Bank Secrecy Act §5318A in which the Treasury has the ability to identify and take action against “money laundering problems” in the United States. money laundering and impose prohibitions on certain transactions.

However, with these powers come some controls. Today, the law obliges the Treasury to publish notices before exercising these powers. The new provision removes these controls, meaning the Treasury could freely exercise special powers without informing the public. In other words, the Financial Crimes Enforcement Network (FinCEN) would be able to covertly interdict any transaction that it deems a “concern” of the Treasury.

If allowed, the provision could severely hamper the crypto industry. According to Brito, the provision could give the Treasury “unchecked and unilateral discretion” to prevent financial institutions such as cryptocurrency exchanges from using cryptocurrency networks. This could potentially prevent millions of people in the United States from having access to crypto without using alternatives such as DeFi or VPN technology.

The provision was first proposed by Connecticut Democrat Jim Himes (D-CT) as an amendment to the National Defense Authorization Act, but was voted out. Now it has made its way verbatim to the America Competes Act of 2022. It was originally intended to grant FinCEN the ability to take action against anyone who laundered cryptocurrency proceeds from attacks ransomware or transactions found to evade penalties.

Last year, Coin Center memorably led the crypto industry in an uphill battle over the definition of a crypto broker in the now-ratified infrastructure bill, but ultimately failed. It remains to be seen whether the latest proposed decision will pass through Congress.

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