As a seasoned crypto investor with a deep understanding of the regulatory landscape, I find the new bill introduced in the United States regarding digital assets deeply concerning. The potential for broad powers granted to the president under S.4443 is alarming, especially given the current regulation of crypto exchanges in the U.S., which requires KYC compliance and strict adherence to anti-money laundering regulations.
As a researcher, I’d put it this way: A newly proposed legislation in the US grants President Biden extensive authority to restrict access to digital assets.
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On June 5, my analysis reveals that Senator Mark Warner proposed a significant amendment to the Intelligence Authorization Act for Fiscal Year 2025, which was made public on X. This legislation grants the U.S. president expansive new authorities over digital assets.
On Monday, Senator Mark Warner (D-VA) seemed to incorporate parts of his Terrorist Financing Prevention Act (S.3441) into a necessary legislation: the “Intelligence Authorization Act for Fiscal Year 2025.”
— blockchain tipsheet (@blockchaintpsht) June 5, 2024
What is known about the new bill?
On June 3, Senate Bill S.4443 was presented, which is referred to as The Act. This legislation aims to authorize financing for the United States Intelligence Community and bestow legal authorities.
The new proposal has raised significant alarm within the cryptocurrency sector. With the recent bill amendment, the U.S. president is granted the authority to impede financial dealings between American citizens and foreign entities suspected of funding terrorist organizations. For instance, the prohibition could extend to transactions involving American-regulated crypto intermediaries and their foreign counterparts.
What the cryptocurrency community says
Financial attorney Scott Johnsson voiced concerns over the law’s extensive reach, pointing out that S.4443 grants the president the authority to implement restrictions at the level of individual protocols or smart contracts.
This proposed ban by the President could easily be interpreted as targeting any protocol, smart contract, or platform that is controlled, operated, or accessible by an individual or entity subjected to US sanctions, according to the Treasury Secretary’s assessment. The potential reach and consequences of this action are significant.
— Scott Johnsson (@SGJohnsson) June 6, 2024
Johnsson posits that legal restrictions may confine users to compliant KYC blockchains, as perceived by him as an endeavor to bolster authority over digital assets under the pretext of combating terrorism. This perspective is drawn from Warner’s amendments, which have their origins in the Terrorism Financing Prevention Act.
Current regulation of crypto exchanges in the U.S.
Starting in March 2013, the Financial Crimes Enforcement Network (FinCEN) categorized cryptocurrency exchanges as money service businesses. As a result, these U.S.-based platforms are obligated to obtain and validate the identities of their users prior to granting them trading access.
Operation of crypto exchanges in the USA
As a crypto analyst, I would explain that to set up a cryptocurrency exchange within the US borders, certain requirements must be met. Depending on the nature of the issued token, it could be categorized as either a security or a currency under American law. The legal framework for cryptocurrencies in the United States is influenced by federal legislation and individual state regulations.
In addition, it’s recommended for American citizens and residents to utilize domestic cryptocurrency exchanges in accordance with FinCEN guidelines. Employing international trading platforms could result in being barred from access due to the detection of a U.S. IP address.
As a security analyst, I would strongly recommend U.S. investors to process their cryptocurrency transactions using local platforms due to the existing regulatory framework and potential risks linked to foreign exchanges.
Regulatory acts
Companies dealing in digital currencies are obliged to adhere to the Bank Secrecy Act (BSA). Based on their specific operations, they need to register with the relevant federal bodies, which may include the Financial Crimes Enforcement Network (FinCEN), Securities and Exchange Commission (SEC), or Commodity Futures Trading Commission (CFTC).
To guarantee adherence, organizations need to perform in-depth evaluations of potential money laundering risks and create effective Anti-Money Laundering (AML) initiatives based on their specific risk levels. These initiatives should encompass extensive policies, procedures, controls, regular compliance audits, designated compliance teams, and continuous education.
The U.S. has become sharply concerned about the crypto industry
As a crypto investor, I firmly believe that the nexus of digital assets and politics will play a pivotal role in shaping the outcome of the 2024 U.S. presidential election. With increasing public acceptance and adoption of cryptocurrencies, the candidates’ positions on regulatory frameworks and blockchain technology will undoubtedly resonate with voters.
As a political analyst, I believe the influence of crypto politics on the upcoming U.S. presidential election could reach unprecedented heights. In contrast to past elections where cryptocurrency was barely mentioned during campaigns, this year several leading candidates have engaged in open discussions about digital currencies. This shift underscores the growing significance of the crypto landscape and its potential impact on economic policies and political discourse.
Last month, the ex-president of the United States, Donald Trump, began accepting cryptocurrency contributions for his political campaign. This development has provided an opportunity for crypto industry supporters, such as Messari CEO Ryan Selkis, to publicly express their views.
Simultaneously, the current U.S. President Joe Biden, known for his administration’s previous skepticism towards digital assets, unexpectedly shifted his stance on cryptocurrencies.
After Trump’s presidential campaign presented cryptocurrencies in a favorable light, the stance of the presidency shifted. Since then, democratic members of Congress have endorsed cryptocurrencies through their votes. The presidential campaign is now reaching out to industry professionals and cryptocurrency experts for advice on shaping future policy.
Will the bill be approved?
As the elections approach, the need for cryptocurrency regulations grows more pressing for the current administration. Yet, with the crypto community emerging as a significant voting bloc, disregarding their concerns would be financially unwise.
The issue of excluding crypto exchanges from the application of the relevant provision on sanctions is still under consideration. A definitive answer from lawmakers is anticipated after more deliberation and clarification.
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2024-06-12 16:35