The RESTRICT Act, formally known as the "Restricting the Emergence of Security Threats that Risk Information and Communications Technology Act," is a worrying new bill that has been recently introduced into the United States Senate. This legislation, co-authored by Mark Warner (Democrat) and Kirsten Gillibrand (co-author of the Responsible Financial Innovation Act), has the potential to cause far-reaching and unintended consequences for various technologies, including cryptocurrency, given its lack of checks and balances.

The proposed legislation is modeled on the International Emergency Economic Powers Act, which empowers the Treasury's Office of Foreign Assets Control (OFAC) to prevent Americans from transacting with sanctioned parties. Similarly, the RESTRICT Act would grant the Commerce Department broad authority to review, prevent, and mitigate any transactions perceived to pose a risk to national security. Other potential aspects of the bill that could impact the cryptocurrency space include tightening sanctions on foreign adversaries, such as China, Cuba, Iran, North Korea, Russia, and the Maduro regime in Venezuela. Fines for breaching RESTRICT legislation would include up to 20 years in prison and/or fines of up to $250,000.

As pointed out by Coin Center, the bill’s language is so broad that it could potentially be misused to ban any technology, or alternatively, certain transactions, that would be linked to a "foreign adversary." One example of this already having taken place can be seen in OFAC’s sanctioning of the immutable smart contracts of the privacy protocol Tornado Cash, highlighting that the RESTRICT Act could place similar roadblocks, or even more permanently restricting bans, on other crypto transactions.

This bill was primarily introduced with the stated intention of targeting the Chinese-owned social media app TikTok, but its implications for the cryptocurrency space are a cause for concern. Key groups, including Coin Center, are actively engaging legislators on the issue, in an effort to ensure that the potential implications for blockchain technology and cryptocurrency, specifically with regard to preventing new innovations, are fully understood and taken into consideration.



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