June 10, 2024
Policy & Regulation

New Law Grants President Sweeping Powers Over Digital Assets

A recently enacted law in the United States has sparked significant controversy due to its expansive authority granted to the president to block access to digital assets. Prominent figure in the digital assets realm, Scott Johnsson, voices strong criticism against this new law. On June 6, he expressed concerns regarding the law’s broad implications, particularly its potential to enable a user-level ban power.

Expanded Presidential Authority to Digital Assets

The law, introduced by Senator Mark Warner, significantly broadens the president’s control over digital assets. It applies to any digital representation of value stored on cryptographically secured distributed ledgers, such as communication protocols and smart contracts.

Under the new legislation, the president can block transactions between US individuals and foreign entities associated with terrorist organizations. This includes imposing stringent conditions on foreign financial institutions with accounts in the US if they facilitate such transactions.

Implications and Critique

Johnsson warns that the law’s extensive reach may compel users to migrate to Know Your Customer (KYC)-compliant and permissioned blockchain networks. Thus, limiting them to regulated blockchains. He suggests that this move could be perceived as an attempt to exert control over digital resources under the guise of counterterrorism efforts.

The elements facilitating this empowerment were reportedly inserted by Senator Warner, drawing from the Terrorism Financing Prevention Act introduced in December 2023. This act allows the US Treasury Department to address emerging threats involving digital assets.

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