Crypto advocates sound alarm on America COMPETES bill over new financial surveillance provisions

On Tuesday night, Democrats of the House of Representatives released their draft language for the America COMPETES Act, a bill that aims to bolster the US in its global rivalry with China. 

The Biden administration’s legislative agenda has faced a number of hurdles. The 3,000-page bill seems to be an attempt to garner a legislative win based on bipartisan concerns over China in advance of the November midterm elections. However, some in the crypto world are calling out a provision entitled “Prohibitions or Conditions on Certain Transmittals of Funds.”

The section cites national security concerns over ransomware as a reason to expand the oversight authority of the Financial Crimes Enforcement Network, the US Treasury’s anti-money laundering office. The Treasury repeats its earlier questionable estimate of $590 million in ransomware payments tracked in “just the first half of 2021.”

“These innovations, particularly through digital assets and informal value transfer systems, while useful to legitimate consumers, are also a boon for bad actors like sanctions evaders, fraudsters, money launderers, and those who commit ransomware at tacks on victimized U.S. companies and which use the financial system to move and obscure the proceeds of their crimes.”

The Treasury’s solution is to give FinCEN broad authorization to freeze or limit transactions from jurisdictions or even just accounts to be deemed “of primary money laundering concern.”

Coin Center, a non-profit organization that lobbies on behalf of decentralized technology, flagged the new provision the next morning. Congressman Tom Emmer (R-MN), a co-chair of the Blockchain Caucus, amplified those concerns on Twitter as well. 

Effectively, the concern is that the language would put minimal checks on the Treasury’s authority over transactions, whichever they determine to be concerning.

The current bill is just a draft. But as illustrated by the Infrastructure Act of late last summer, legislation is moving in fits and starts. This bill, too, could face a truncated process given political pressures. However, the Senate, in particular, has been a stumbling block.