As reported by Cointelegraph, a controversial new law has sparked significant concern from experts in the digital assets field, granting the President of the United States expansive authority to restrict access to digital assets. Scott Johnsson, a prominent figure in the digital assets sector, voiced strong criticism of the law's far-reaching implications, stating on June 6th, "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."
Furthermore, an individual on X social platform highlighted Senator Mark Warner's apparent strategic embedding of legislative components on June 5th, effectively enabling the controversial expanded powers accorded to the U.S. president regarding digital assets.
The newly enacted law presents a broad definition of "digital assets," encompassing various forms of digital representations of value recorded on cryptographically secured distributed ledgers, including "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."
According to the provisions of the new law, the president is empowered to halt transactions between U.S. persons and foreign entities identified as supporters of terrorist organizations. This also entails imposing stringent conditions on foreign financial institutions maintaining accounts in the U.S. if they are found to facilitate such transactions, with the directive to "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)."
Johnsson's analysis underscores the law's extensive applicability, potentially compelling users to join Know Your Customer (KYC)-compliant and permissioned blockchain networks, thereby restricting them to regulated blockchains. He issues a warning that the law may be perceived as an attempt to exert control over digital assets under the pretense of combating terrorism.
The legislative elements reportedly introduced by Warner to enable this expanded presidential authority are said to have been extracted from the Terrorism Financing Prevention Act, introduced in a December 2023 announcement.
This act grants the U.S. Treasury Department the mandate to address "emerging threats involving digital assets."