Commentators on X have expressed substantial apprehension regarding the recent enactment of a new law that grants the president of the United States the authority to restrict access to digital assets.
On June 6, Scott Johnsson, a prominent figure in the digital assets sector, expressed his dissatisfaction with the law’s extensive scope, stating:
“It’s hard to see how this isn’t intended to be a user-level ban power by the President on any protocol/smart contract that’s deemed by the Treasury Secretary to be “controlled, operated or [made] available” by a foreign sanctions violator. Breathtaking scope and implications to corral users to KYC/permissioned chains.”
The scrutinized new expansive powers granted to the U.S. president over digital assets were enabled by Senator Mark Warner’s apparent strategic insertion of legislative elements, as posted by an X user on June 5.
“Digital assets” are extensively defined in the new law, which includes any digital representation of value that is recorded on cryptographically secured distributed ledgers.
The president has the authority to obstruct transactions between U.S. individuals and foreign entities that have been identified as supporting terrorist organizations under the new law.
This encompasses the imposition of stringent conditions on foreign financial institutions that maintain accounts in the United States if they are discovered to be facilitating such transactions.
“[…] any communication protocol, smart contract, or other software […] deployed through the use of distributed ledger or similar technology; and […] that provides a mechanism for users to interact and agree to the terms of a trade for digital assets.”
Johnsson’s analysis implies that the law’s extensive applicability could compel users to participate in blockchain networks that are Know Your Customer (KYC)-compliant and permissioned, thereby restricting them to regulated blockchains.
He cautions that the action could be perceived as an attempt to control digital assets under the pretext of combating terrorism.
The components that Warner purportedly incorporated to facilitate this presidential empowerment are derived from the Terrorism Financing Prevention Act.
The act was introduced in a December 2023 announcement, enabling the U.S. Treasury Department to pursue “emerging threats involving digital assets.”
