The RESTRICT Act: A Threat to Crypto and Other Technologies
A new bipartisan bill, formally called the "Restricting the Emergence of Security Threats that Risk Information and Communications Technology Act" but informally known as the TikTok ban, has been introduced in the United States Senate.
If passed into law, the bill could have broad and unexpected implications for various technologies, including crypto. Think tank Coin Center has warned that the RESTRICT Act would give the Commerce Department new powers that could be used to review, prevent, and mitigate transactions deemed to pose a risk to national security.
The bill is similar to the International Emergency Economic Powers Act, which authorizes the Treasury’s Office of Foreign Assets Control (OFAC) to block Americans from transacting with sanctioned parties.
Potential мisuse of the RESTRICT Act
Coin Center has warned that the RESTRICT Act creates blanket authority with few checks and could therefore be misused to ban just about anything linked to a “foreign adversary.”
The RESTRICT Act would be easier to apply and harder to challenge than the International Emergency Economic Powers Act, raising concerns about its potential implications for the crypto space. According to the bill, the foreign adversaries of the US include China, Cuba, Iran, North Korea, Russia, and the Maduro regime in Venezuela. The bill foresees penalties of imprisonment for 20 years and fines of $250,000.
Concerns for the crypto space
Coin Center has expressed concern about the bill’s potential implications for crypto. The think tank has pointed to the OFAC’s sanctioning of Tornado Cash immutable smart contracts as a misuse of the law to ban a class of technology. With its broad language, the RESTRICT Act could lead to similar consequences.
The bill’s lead author, Democrat Mark Warner, believes that the US needs a comprehensive, risk-based approach to tackle sources of potentially dangerous technology before they gain a foothold in America.
READ MORE: Disgraced Co-Founder of Collapsed Crypto Exchange FTX Facing New Criminal Charges
Other potential threats to technologies
While the act has been introduced amid suspicions that Chinese-owned TikTok is gathering user data on behalf of the Chinese government, its potential implications could extend beyond TikTok.
Legal experts have highlighted that the RESTRICT Act’s vague language could be used to restrict various technologies, including virtual private networks (VPNs). The bill’s sponsors include Kirsten Gillibrand, co-author with Cynthia Lummis of the Responsible Financial Innovation Act.
If passed into law, the RESTRICT Act could have far-reaching and potentially unintended implications for various technologies. While it aims to address the ongoing threat posed by technology from foreign adversaries, its broad language and lack of checks could lead to misuse and unintended consequences. Its potential impact on the crypto space, including bans on certain technologies and transactions, is a cause for concern.
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