According to Coin Center director, the proposed bill would essentially bypass existing checks and balances on the Treasury Secretary’s authority in surveilling financial institutions, including crypto firms.
Jerry Brito, the executive director of non-profit crypto policy advocate group Coin Center, suggested U.S. residents call their elected officials over possible privacy and due process concerns in a new bill proposed by House leaders.
According to a Wednesday Twitter thread from Brito, the America COMPETES Act recently released by House members contains a provision that he said would be “disastrous” for crypto users from both a privacy and a due process standpoint. According to the Coin Center director, a section of the bill on the “prohibitions or conditions on certain transmittals of funds” proposed by Representative Jim Himes would give the U.S. Secretary of the Treasury “unchecked and unilateral power to ban exchanges and other financial institutions from engaging in cryptocurrency transactions.”
Under the proposed framework, the Treasury Secretary would be able to employ the Bank Secrecy Act to require certain financial institutions to report information around transactions potentially connected to money laundering and prohibit them from serving account holders with alleged ties to illicit funds. The provision, according to Brito, would essentially bypass the existing checks and balances on the Treasury Secretary’s authority in this area.
“First, the law requires that Treasury engage in a public rulemaking before instituting a prohibition,” said Brito. “Second, the secretary can impose a special surveillance measure through a simple order, but its duration is limited to 120 days and must be accompanied by a public rulemaking […] While not full due process, these limitations at least alert the public and gives the public some opportunity to comment on a special measure’s merit or constitutionality.”
The America COMPETES Act cited cryptocurrencies being used for payments in ransomware attacks on U.S.-based companies. Removing restrictions from the Treasury Department’s “special measures” authority could have significant implications for individuals and companies operating in the crypto space, according to Brito and Coin Center research director Peter Van Valkenburgh: “[The law] would hand the Treasury Secretary unchecked discretion to forbid financial institutions (including cryptocurrency exchanges) from offering their customers access to cryptocurrency networks. The Secretary may not use this discretion immediately, but it is not power the Department should have.”
It was quite recently when Americans announced accepting crypto in the treasury and making it an official currency for transactions.
The United States Department of the Treasury had issued a review on sanctions and suggested the government do more to develop its infrastructure and policies regarding digital assets.
The Treasury Department said the growing use of digital assets was hampering the implementation of sanctions while balancing funds from legitimate humanitarian organizations. The Department suggested that better communication between itself and the crypto industry, financial institutions, and others, in addition to “deepening its institutional knowledge and capabilities,” could help improve current policy. “Sanctions are a fundamentally important tool to advance our national security interests,” said Deputy Treasury Secretary Wally Adeyemo. “Treasury’s sanctions review has shown that this powerful instrument continues to deliver results but also faces new challenges. We’re committed to working with partners and allies to modernize and strengthen this critical tool.” However, such news about the provisions has caused quite a controversy in the States.
The balance between regulating crypto, providing pseudo-anonymity for users, and working innovative technology into existing financial systems is delicate. However, Brito’s call to have followers contact their representatives over potential privacy concerns may have some merit given current Treasury Secretary Janet Yellen’s views on the space. During her confirmation hearing in January 2021, Yellen said crypto represents a “particular concern” for the U.S. Treasury, associating many token projects with “illicit financing” and money laundering.