Coin Center says the RESTRICT Act could be used to ban Bitcoin
A bipartisan group of senators introduced a bill earlier this month that seeks to strengthen the federal government’s powers in combating perceived foreign technology threats. And some in the digital asset industry are warning that could potentially spell disaster for crypto.
The bill entitled RESTRICT Act – which stands for Restricting the Emergency of Security Threats that Risk Information and Communications Technology – has received support from 21 legislators who have co-sponsored the bill, as well as the White House, which has encouraged Congress “to act quickly to send it to the President’s desk.”
In the name of protecting US national security, the bill calls on the Commerce Secretary “to identify, deter, disrupt, prevent, prohibit, and reduce transactions involving information and communications technology products in which any foreign adversary has any interest” by establishing new procedures.
The introduction preceded a congressional hearing on Tik-Tok last week, where officials grilled the social media app’s CEO with questions about the firm’s ties to China.
But the bill’s language is so broad that it could be used to prevent Americans from conducting cryptocurrency transactions or engaging with networks like Bitcoin altogether, according to a blog posts from the cryptocurrency advocacy group Coin Center.
“While the primary targets of this legislation are companies like Tik-Tok, the language of the bill could potentially be used to block or disrupt cryptocurrency transactions and, in extreme cases, block Americans’ access to open source tools or protocols like Bitcoin,” it says.
The advocacy group’s primary issue with the RESTRICT Act is that it would create a regime within the Commerce Department that would effectively run parallel to the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), said Coin Center Research Director Peter Van Valkenburgh. Decrypt.
In that sense, Van Valkenburgh said the regime would be “redundant” and create “two different parts of the executive branch [that] can independently and without many procedural checks ban technologies.”
Another problem with the bill, according to Coin Center, ies the potential scope of the word “interest,” which could be “exploited to prohibit Americans from using entire classes of technologies” if interpreted broadly, the advocacy group warned in its blog.
As an example, Coin Center referenced the blacklisting of Ethereum coin mixing tool Tornado Cash last summer by OFAC, which Coin Center is currently challenging in court.
Under the International Emergency Economic Powers Act (IEEPA), OFAC is given the power to prevent Americans from doing business with sanctioned foreign persons.
And although it is used to maintain privacy between people conducting Ethereum transactions, Tornado Cash was sanctioned by OFAC as a whole for alleged use of North Korean state-sponsored hacking groups to launder stolen funds.
Coin Center stated that it would not object to the RESTRICT Act if it were applied “narrowly” to prevent Bitcoin transactions with a specific recipient, but cautioned against an interpretation that could argue “the entire class of all Bitcoin transactions, for example, are a class of transactions in which U.S. foreign adversaries have an interest.”
The advocacy group also raised concerns about Americans’ ability to challenge abuse of power based on the bill’s language and the potential for it to infringe on free speech compared to the IEEPA.
“It’s going to be more difficult to challenge the designations made by the Secretary of Commerce under the RESTRICT Act if it were to pass into law because of the limitations on people’s ability to bring challenges,” Van Valkenburgh said.
The bills Language is expansive in terms of the technology to which it will apply, including “mobile networks”, “cloud-based or distributed computing and data storage”, “payment applications” and “e-commerce technology”, such as “online marketplaces” or “Internet-enabled payment technology.”
“It’s one thing to say that the national security complex should be able to ban specific examples of technology when they are directly owned and controlled by a foreign adversary,” Van Valkenburgh said. “But it’s another thing to say that you can just identify an entire class of technologies, regardless of their foreign ownership, and then claim that a foreign adversary has an interest in them.”
