The COMPETES Act becoming law may let the Treasury Secretary block United States companies from dealing with some cryptocurrency exchanges or transactions.
The crypto space receives alarm amid possibilities that the United Stated will empower the Treasury sector to ensure arbitrary decisions on allowing cross-border transactions, including those that involve crypto.
The bill presented to the United States House of Representatives early on the week COMPETES Act would power the Treasury Secretary to impose requirements or block international transactions when the official discovers that the accounts or transactions participated in money laundering. Meanwhile, the bill aims to spur economic competitiveness with the China market.
Coin Center’s blog post warned the bill could empower the Treasury Secretary to prevent financial institutions in the US from dealing with cryptocurrency exchanges, jurisdictions with crypto exchanges, and crypto transactions authorized by non-custodial wallets or miners, not in the US.
The blog highlighted that the bill would offer Treasury Secretary the chance to forbid platforms (including crypto exchanges) from providing crypto networks access to their clients. Though the Secretary might not apply the move immediately, Coin Center believes the Department should not have such powers.
Remember, the Secretary already had this power but in limited quantity. According to the existing law, the regulator can impose such transaction restrictions after consultation with the Fed Reserve Chain, federal regulators, State Secretary, and other agencies. However, a public notice should accompany the transaction limits. Moreover, the restriction should end after 120 days not unless the Treasury Department decides to extend the block.
Coin Center added that the new law would alleviate the 120-day expiration period. Moreover, it will add crypto to the financial transaction types that the Secretary can limit. The provision reveals goals to ensure innovative financial services to smoothen cross-border transactions, “particularly via crypto, which attracts criminal activities.” Nevertheless, the new bill acknowledges that crypto can be lucrative to genuine users.
The bill highlighted that ransomware attacks on United States firms demand payment in crypto surge over the recent years. Meanwhile, the Treasury estimated the ransomware payments hit $590 million in 2021 Q1 only, higher than 2020’a $416 million. Such developments attracted the move by Treasury to limit international cryptocurrency transactions.