Crypto advocates score win in debate over COMPETES Act language

The crypto lobby is on track to score a win on new financial surveillance legislation. 

Congressman Jim Himes has prepared an amendment to language in the so-called America COMPETES Act outlining new surveillance-related powers for the Treasury — language that crypto advocacy group Coin Center began warning of last week.

The lobbying organization and the representative from Connecticut indeed worked together on the amendment, which aims to keep in place limits on the Treasury’s ability to step in on private financial accounts. 

The language of the COMPETES Act as it originally came out last week would give the Treasury sweeping powers to freeze or block transactions and accounts interacting with foreign entities by expanding its existing authorities under 31 U.S. Code § 5318A, which lists special measures that Treasury is allowed to take to prevent money laundering.

One such measure, “Prohibitions or conditions on opening or maintaining certain correspondent or payable-through accounts,” is restricted to regulation, which means that the Treasury must issue public notice and remain open to public comment when it aims to restrict accounts.

The language of the COMPETES Act would change that to “by order, regulation, or otherwise as permitted by law,” a significantly lower bar for the Treasury’s public accountability. 

The bill cited the need to combat ransomware in particular, and would also grant the Treasury extensive discretion to target transactions by type. Coin Center noted that this would create risk for crypto exchanges interacting with self-hosted wallets. As a result, the issue provoked a minor uproar among the crypto world. 

In addition to requiring the Treasury to go through regulatory processes in order to block accounts, Himes’s amendment would retain 120-day limits on such orders.

A leader of the moderate New Democrats Coalition who sits on both the Financial Services Committee and the Intelligence Committee, Himes will present the amendment later this week for debate. Since was a leader in drafting the original language, the outlook for changing the crypto language is good.

Moreover, many in the crypto industry will find Himes’s interest in engaging with Coin Center encouraging. The crypto policy debate and, especially, related lobbying has been heating up in Washington. Coin Center’s reaction to the new language resembled another high-profile conflict over IRS definitions of “broker” in cryptocurrency, which ultimately made it into law but also drew a great deal of industry attention to Washington.