A draft for the America Competes Act of 2022 was introduced in the House of Representatives earlier this week, but a provision buried deep in the 2,912-page document has alarmed lobbyists who are concerned about how it grants unchecked power to a single entity capable of banning cryptocurrency transactions at will. Cryptocurrencies have been a topic of hot debate lately, with politicians concerned about the criminal aspects such as money laundering and how it has quickly it has crossed $3 trillion in market worth, posing risks of an unprecedented financial system imbalance.
Talks about banning cryptocurrencies have already happened on numerous occasions in the past. And it was only in October last year that US Securities and Exchange Commission (SEC) Chair Gary Gensler clarified the agency has no immediate plans of banning cryptocurrencies, at least not yet. But just like Big Tech and the linked theory of concentrating an enormous amount of power in the hands of a few corporations, cryptocurrencies and their meteoric rise have also elicited similar claims, even though blockchain evangelists keep preaching about transparency and equitable distribution.
However, the cryptocurrency industry is now worried about another proposed legislation that flips the power concentration formula in favor of lawmakers, even allegedly granting a single entity unchecked discretion to ban any crypto transaction. The hot topic of contention is the America Competes Act of 2022, and specifically, a provision called “Prohibitions Or Conditions On Certain Transmittals Of Funds” buried halfway through the lengthy draft. In a nutshell, the US Treasury Department has to abide by certain checks in order to take special actions for prohibiting transactions that are not in the country’s interests, say laundering or criminal activity funding. But those special actions require a proper regulation, the public must be notified, and the ban can only be imposed for 120 days. The provision expands that power to cover crypto transactions and exchanges as well and strikes the aforementioned checks, as well. Needless to say, crypto lobbying groups like Coin Center are not happy about it. Unsurprisingly, regulatory pressure is also said to be driving companies like Facebook to abandon their ambitious cryptocurrency plans altogether.
Cryptocurrency Kryptonite
“This amendment offers the Secretary an entirely unchecked power to secretly ban or condition any transaction at any domestic financial institution. It is a dangerously authoritarian approach to solving money laundering concerns,” Coin Center Executive Director Jerry Brito wrote in a lengthy post. Brito is not the only one raising red flags. The r/CryptoCurrency subreddit has also gone into a meltdown mode, equating the provision with a poison pill for the crypto industry. As for the provision, it cites the ballooning threat of ransomware attacks and money laundering as one of the key reasons why the Treasury Secretary should be bestowed with these “draconian” special powers.
Kristin Smith, Executive Director of the Blockchain Association, remarked that the provision will allow “a misguided crackdown” on cryptocurrency usage. The Blockchain Association is in talks with lawmakers to sit down for discussions over the provision before the draft is passed and becomes a regulation. Ransomware attacks linked to China are a recurring theme in the draft, which is interesting as China’s own crackdown on cryptocurrencies was brutally swift and widespread. In June last year, The People’s Bank of China (PBOC) directed major lending firms and payment service providers to cut all ties with accounts that have a history of cryptocurrency-related operations.
Sources: Coin Center, The Blockchain Associations / Twitter, Reddit