The crypto community has been thrown into a state of apprehension following the introduction of a new law by U.S. Senator Mark Warner. Warner’s major aim for the proposal is to combat terrorism and other illicit activities that might be crypto-related. However, it could also grant the President sweeping powers to block access to digital assets. This possibility has now sparked conversations and growing concerns among crypto enthusiasts.
The Proposal
Notably, the proposed law defines crypto assets broadly. According to the law, what qualifies as a crypto asset may include anything from digital representation of value backed up by cryptographic ledgers, communication protocols, or even smart contracts.
On Thursday, Scott Johnsson, a finance lawyer and public advocate of crypto, took to social media to weigh in on the subject, citing the potential implications of the proposed law.
Johnsson believes that the bill, which is currently being reviewed by the Senate, would put the President in a position where he gets to use the law as a tool to impose bans on any DeFi protocol or smart contract linked to foreign sanctions violators as identified by the Treasury Secretary. Johnsson wrote partly:
“It’s hard to see how this isn’t intended to be a user-level ban power by the President.”
Critics Bash Mark Warner, Say Proposal Would Impacts on DeFi
The skepticisms from Johnsson and the likes stem from revelations that Senator Warren may have integrated clauses from the Terrorist Financing Prevention Act [S.3441] into the proposed legislation. This Act, introduced in December 2023 by U.S. Senators Mitt Romney, Mark Warner, Mike Rounds, and Jack Reed, permits the Treasury to block transactions involving “foreign digital asset transaction facilitators” flagged as sanctioned entities.
Johnsson and others like him are of the opinion that including this clause could spell doom for the crypto industry. They believe that the proposed rule potentially puts the future of decentralized finance in the hands of the Treasury Department.
Johnsson noted that the law is overreaching by all ramifications. Theoretically, he believes that the law could force users to migrate to Know Your Customer (KYC)-compliant and permissioned blockchain networks. This effectively limits them to regulated blockchains only. He also hinted that the legislative move may even be part of a broader strategy by the U.S. He suggested that the United States may be attempting to take over the crypto economy albeit without being noticed. That is, under the guise of anti-terrorism measures.
