US President Granted Authority to Block Digital Asset Access under New Law

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As a crypto investor with a background in finance and law, I’m deeply concerned about the new proposed legislation aimed at combating terrorism and illicit activities in the digital assets sector. The addition of clauses from existing legislation, such as the Terrorist Financing Prevention Act, grants the President the power to block access to digital assets and transactions with foreign entities flagged as linked to terrorism.

As acrypto analyst, I’ve noticed that members of the cryptocurrency community are voicing considerable apprehension regarding a newly proposed bill from US Senator Mark Warren. This legislation, intended to combat terrorism and illicit activities, has raised concerns among crypto enthusiasts.

On Thursdays, finance lawyer andcrypto economy supporter Scott Johnsson brought attention on social media to the potential consequences of a newly proposed law. This legislation, currently under Senate consideration, grants the President the power to restrict access to digital assets if passed.

Borrowing Elements From Existing Legislation

I, as an analyst, would rephrase Johnsson’s statement as follows: On X (previously referred to as Twitter), I raised concerns about a potential law that could enable the President to ban specific decentralized finance (DeFi) protocols under the scrutiny of the US Department of the Treasury.

“Johnsson wrote that it’s difficult to interpret this as anything other than a ban power for the President, at the user level, on any protocol or smart contract controlled, operated, or offered by a person subject to foreign sanctions, according to the Treasury Secretary.”

Johnsson became worried after noticing a post on X, which disclosed that Senator Warren intended to adopt sections from the Terrorist Financing Prevention Act (S.3441) to amend her proposed legislation.

In December 2023, a legislative act was proposed by US Senators Mitt Romney, Mark Warner, Mike Rounds, and Jack Reed. This legislation grants the Treasury Department the authority to prevent transactions involving “foreign digital asset facilitators” who have been designated as sanctioned entities.

As a crypto investor, I’d express it this way: I have concerns about the potential implications of the new clause added by the finance lawyer. This provision could put the Treasury in the driver’s seat when it comes to shaping the future of the crypto sector. While some centralized control might be unavoidable, the fear is that this could undermine the very essence of decentralized finance – its autonomy and self-governance.

Implications for the Crypto Sector

I believe that the extensive reach of regulations could push users towards utilizing KYC-compliant and permissioned blockchain networks due to their regulatory compliance. Consequently, this may limit the usage of blockchains to only those that are regulated.

Additionally, Johnsson proposed that the suggested legislation could be an element of a more extensive U.S. plan to regulate the cryptocurrency market using the facade of antiterrorism policies.

As a crypto investor, I’d interpret the proposed legislation this way: Any digital token or coin qualifying as a value bearer, backed by cryptographic techniques such as hashing algorithms and public keys, falls under the crypto asset umbrella. This includes not only the more traditional digital currencies but also complex systems like communication protocols and self-executing contracts, all secured via cryptographically-verified distributed ledgers.

Any form of communication method, self-executing contract, or software application, which is implemented using distributed ledger or related technologies, and enables users to transact and reach consensus on the conditions of trading digital assets.

As a researcher studying this topic, I would explain it this way: Upon its implementation, the new law grants the President the authority to prohibit US citizens from engaging in financial dealings with identified foreign entities suspected of having ties to terrorism.

As a researcher examining this topic, I would note that U.S. financial institutions could be subjected to rigorous regulations should they be discovered facilitating prohibited transactions.

Political Climate and Crypto Legislation

Currently, the implementation of the new legislation is unfolding amidst substantial political unrest in the US.

On one side, laws have been passed to support cryptocurrencies, including the Financial Innovation and Technology for the 21st Century Act, which garnered backing from both political parties.

As a crypto investor, I’ve been following the latest development in the regulatory landscape closely. Lately, Congress passed a bill that directly impacts the Securities and Exchange Commission (SEC) and their Staff Accounting Bulletin No. 121 (SAB 121). With this new measure in place, banks are no longer allowed to keep digital assets on their balance sheets. Furthermore, any companies engaged in cryptocurrency custody must record their customers’ crypto holdings as liabilities instead. This change could potentially shift the way these businesses operate and may impact their financial reporting significantly.

After rejecting the legislation, President Joe Biden expressed that the bill wasn’t aligned with the prosperity of the American public as he saw it. In his perspective, his government would not back initiatives that posed risks to the welfare of consumers or investors.

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2024-06-06 17:01