Jerry Brito, executive director of the nonprofit crypto policy advocacy group Coin Center, suggested that U.S. residents call their elected officials about potential privacy and due process issues in a new bill proposed by House leadership.
According to Coin Center's director, the proposed bill would essentially bypass existing checks and balances on the Treasury Secretary's authority in overseeing financial institutions, including crypto companies.
A threat to cryptocurrency transactions
According to Brito's Twitter feed, the America COMPETES Act recently released by House members contains a provision that he says would be "disastrous" for cryptocurrency users from a privacy and due process perspective. According to the Coin Center director, a section of the bill on "prohibitions or conditions on certain transmissions of funds" proposed by Representative Jim Himes would give the U.S. Treasury Secretary "unchecked and unilateral authority to prohibit exchanges and other financial institutions from engaging in cryptocurrency transactions."
Under the proposed framework, the Treasury Secretary could use the Bank Secrecy Act to require certain financial institutions to report information about transactions potentially related to money laundering, as well as prohibit them from serving account holders with suspected links to illicit funds. According to Brito, the provision would essentially circumvent existing checks and balances on the Treasury Secretary's authority in this area.
"First, the law requires Treasury to engage in public regulation before instituting a ban," he said. "Second, the Secretary may impose a special oversight measure by simple order, but it is limited in duration to 120 days and must be accompanied by a public rulemaking...Not being due process, these limitations at least alert the public and give the public an opportunity to comment on the propriety or constitutionality of a special measure."
Significant impact on users
The America COMPETES Act has cited cryptocurrencies used for payments in ransomware attacks against U.S.-based businesses. Removing restrictions from the Treasury Department's "special measures" authority could have significant implications for individuals and businesses operating in the crypto space, according to Brito and Coin Center research director Peter Van Valkenburgh:
"[The legislation] would give the Secretary of the Treasury unchecked discretion to prohibit financial institutions (including cryptocurrency exchanges) from offering their customers access to cryptocurrency networks. The Secretary cannot use this discretion immediately, but it is not the power the Department should have."
The balance between regulating the crypto industry, providing pseudo anonymity to users, and integrating innovative technologies into existing financial systems is a delicate one. Brito's call for subscribers to contact their representatives about potential privacy issues may have some merit given current Treasury Secretary Janet Yellen's views on the space. During her confirmation hearing in January 2021, Yellen said the crypto industry is a "particular concern" for the U.S. Treasury, linking many token projects to "illicit financing" and money laundering.
Jerry Brito denounces the various measures in the new House of Representatives bill regarding the regulation of cryptocurrency transactions. Indeed, this measure would give the U.S. Treasury Secretary an inordinate power over exchanges and financial institutions. Far from only impacting financial institutions, this law would also have a significant influence on users who would be denied access to crypto networks. Will this "disastrous" provision succeed?
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