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.
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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, as well as 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 surveillance special 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.”
Included in the America COMPETES Act just introduced in the House, and which will very likely pass in some form, is a provision that would be disastrous not just for cryptocurrency but for privacy and due process generally. https://t.co/vLJLnIhQhB pic.twitter.com/1EC0SBaetk
— Jerry Brito (@jerrybrito) January 26, 2022
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.”
The balance between regulating crypto, providing pseudo-anonymity for users, and working innovative technology into existing financial systems is a delicate one. 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.