The broad wording of the new bill proposed by US Senator Warren has caused strong dissatisfaction in the encryption industry

Senator Elizabeth Warren has proposed legislation targeting cryptocurrency use in Russia, which could ultimately require more action from exchanges.

Some in the industry said that, despite the worrisome implications of the bill’s language, it was too early to raise the alarm.

On March 17, Warren introduced the Digital Asset Sanctions Compliance Enhancement Act at a Senate Banking Committee hearing. It proposes to further empower the Treasury Department to prohibit crypto service providers from trading with all addresses linked to Russia and to sanction anyone found to have provided substantial assistance or support to those sanctioned. The broad language used in these terms could lead to the implication of some unexpected service providers if the government were to take advantage of these expanded powers.

worded too broadly

The specific wording of the bill is a major sticking point for the industry.

The Act adopts a broad definition of a “digital asset exchange service provider,” which it defines as “the purchase, sale, loan, exchange, custody, holding, verification, or creation of digital assets (including any communication protocol, decentralization, etc.) for others. financial technology, smart contracts or other software, including open source computer code) to provide a significant convenience to any person or group.”

In an interview with The Block, Mark Wetjen, former acting chairman of the Commodity Futures Trading Commission (CFTC) and current head of FTX policy and regulatory strategy, said that definitions have always been key to digital asset legislation, and Warren’s bill is no exception.

“It’s a very, very broad wording, especially when it comes to the definition of a digital asset exchange service provider,” he said. “It’s very, very broad, very similar to some of the language reported in last year’s infrastructure appropriations bill. … If it becomes law, it will definitely involve not only centralized platforms, but decentralized platforms as well.”

As pointed out by the crypto policy think tank Coin Center, this not only places higher requirements on exchanges, but also on technicians, decentralized finance protocols, non-custodial wallets, open source software developers, and more.

“The wording of the bill could easily be understood to encompass people who write software that sanctioned people use to transact, people who run nodes on peer-to-peer networks where sanctioned people transact, and blockchains where sanctioned people transact. miners or otherwise verified,” the group wrote in a recent article.

Some of these individuals may be implicated by the overly broad wording of the bill, and they may not even know, or be unable to discern, that their tools are being used to evade sanctions, such as those publishing open source code.

widely criticized

The bill has been widely criticized by industry insiders because of its broad definition. As Kara Calvert, head of U.S. policy at Coinbase, tweeted: “The Warren Act is behind the curve, out of touch, and undemocratic.”

It might even be unconstitutional, according to Coin Center. Under some interpretations, the wording could give the president the power to ban open source code, which the think tank says violates the First Amendment. In its post, it called the bill “dangerously ultra vires and opportunistic.”

“This will do nothing to improve sanctions against Russia, and may even increase the ability of the Russian government to isolate and control those within its borders who do not support the war,” Coin Center wrote. The cryptocurrency ecosystem imposes unreasonable and unconstitutional restrictions.”

According to industry insiders, exchanges are already complying with existing sanctions, and there is little evidence that cryptocurrencies are being used more than traditional financial instruments to evade sanctions.

Thomas Hook, chief compliance officer at crypto exchange Bitstamp, pointed to the lack of evidence for this claim and the greater ability of blockchain technology to prevent sanctions evasion.

“Blockchain analytics tools are widely used across the cryptocurrency industry and globally, and it has enabled unprecedented insights into the movement of funds and provides greater control than traditional finance in preventing sanctions evasion.” Hook Tell The Block, “If what Congress wants is tougher sanctions, they should implement those sanctions within existing procedures that we and the rest of the crypto industry will take control to enforce.”

lack of broad support

Despite serious industry concerns, the legislative process is still in its early stages.

“It’s unclear how likely it is that these bills will become law, but we’ll certainly be watching them closely and as they unfold,” Wetjen said.

Some believe Warren’s proposal won’t go very far. Jerry Brito, executive director of Coin Center, tweeted that he does not currently think the bill will move forward.

“It has no bipartisan support, doesn’t appear to be attached to anything ‘must-pass’ and runs counter to the advice of experts and the government,” he tweeted.

Jake Chervinsky, policy director at the UK Blockchain Association, agreed with Brito. In a recent Twitter conversation, the pair tried to put the industry’s concerns into perspective. When grassroots organizer Dennis Porter called on cryptocurrency advocates to call on their members of Congress to oppose the bill, Brito said that since progress on the bill is unlikely, now is not the time to drain community resources.

“This is not the time to get in touch with Congress or sound the red alarm. As things stand, this bill clearly lacks support, so it’s likely not going to pass. Let’s not be in a hurry to call the wolf,” He said in a tweet reply.

The bill is also supported by 10 other Democratic senators, and Rep. Brad Sherman has also said he plans to introduce a companion bill in the House.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-broad-wording-of-the-new-bill-proposed-by-us-senator-warren-has-caused-strong-dissatisfaction-in-the-encryption-industry/
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