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New Law Empowers US President to Block Access to Digital Assets

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The president now has unprecedented power to restrict access to digital assets thanks to a new U.S. law, which has raised serious questions about its wide-ranging effects and possible negative effects on users.

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A new law that gives the US president broad authority to impede access to digital assets has raised serious concerns among commentators on X.

On June 6, well-known expert on digital assets Scott Johnsson expressed his disapproval of the law’s expansive provisions, saying:

“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.”

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Senator Warner’s legislative ploy

On June 5, a user named X shared a screenshot of Senator Mark Warner strategically inserting legislative elements, allowing the president of the United States to exercise unprecedented and closely watched authority over digital assets.

The term “digital assets” is defined broadly in the new law to include any digital representation of value kept on distributed ledgers that are cryptographically secured.

“[…] 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.”

Just some “Biden” time

The new law gives the president the authority to halt transactions between citizens of the United States and foreign companies that have been found to be funding terrorist groups.

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If foreign financial institutions are found to be facilitating such transactions, they may be subject to stringent conditions on their ability to maintain accounts in the United States.

“[…] prohibit any transactions between any person subject to the jurisdiction of the United States and a foreign digital asset transaction facilitator identified under paragraph (1).”

Consequences for users of digital assets

According to Johnsson’s analysis, users may be forced to join permissioned and Know Your Customer (KYC) compliant blockchain networks due to the law’s broad applicability, which would ultimately restrict their access to regulated blockchains.

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He issues a warning that the action might be interpreted as an attempt to seize control of digital property while disguising its opposition to terrorism.

The components of the Terrorism Financing Prevention Act that Warner is said to have added allow for this presidential empowerment.

The act, which was unveiled in December 2023, gives the US Treasury Department the authority to pursue “emerging threats involving digital assets.” CRYPTOCASTER® - DECENTRALIZED FREEDOM!


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