Bill That Allows Treasury Secretary to Block International Crypto Transactions Now Removed

January 31, 2022 7:03 pm

Formerly, there was a new bill proposed that would give the Treasury Secretary the ability to block all international crypto transactions called the America COMPETES Act.

To be more specific about what the bill entails, the secretary can block transactions that the government if they find that the transaction is deemed a risk or may be involved in money laundering.

Although that was the purpose, others have pointed out that the bill essentially gives complete power to also block all financial institutions based in the United States from interacting with crypto exchanges that are outside the country’s jurisdiction.

As a result, this would include many of the major crypto exchanges that are operational today as many of them are based in other countries outside the US in order to operate in areas that have regulations that are more welcoming of crypto.

CoinDesk reports:

Coin Center warned in a blog post, however, that the bill could therefore allow the Treasury secretary to block all U.S. financial institutions from interacting with a crypto exchange, a jurisdiction that has crypto exchanges and crypto transactions validated by a non-U.S. miner or non-custodial wallets.

Under existing law, the Treasury secretary, in consultation with the Federal Reserve chairman, secretary of state, federal regulators and other agencies, has the power to impose such restrictions on transactions.

However, a public rulemaking notice must be issued with the restriction, and the restriction lifts after 120 days unless the Treasury Department implements a rule continuing the block after the comment period.

Thankfully, it seems that an agreement was recently made to remove the provision within the bill that would grant the secretary the ability to block all international crypto exchanges to the relief of the broader crypto community around the world.

The recent change will also undo the clear statement that digital assets like crypto were types of financial assets that the treasury could restrict.

When a press statement was held on why the bill was introduced in the first place, the reason given was that innovation in doing digital transactions have provided more opportunity for illicit activity and that this would streamline the process of tackling those problems.

FXStreet shares:

The provision highlights “innovations in financial services” that make it easier to send funds across borders, “particularly through digital assets” which make it easier for criminals to transfer funds (though the bill also concedes that digital assets may be “useful to legitimate consumers.”

“Ransomware attacks on U.S. companies requiring payments in cryptocurrencies have increased in recent years, with the U.S. Treasury estimating that ransomware payments in the United States reached $590 million in just the first half of 2021, compared to a total of $416 million in 2020,” the bill said.

Thanks to  Jerry Brito, the executive director of Coin Center, and others who lobbied against the bill, it seems that international crypto transactions by financial institutions will not be under regulatory pressure for now.

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