A recently passed U.S. law grants the president extensive powers to block access to digital assets, prompting widespread concern about its far-reaching effects on users and the digital asset market.
The new legislation enables the president to halt transactions involving digital assets if they are linked to foreign entities deemed as supporting terrorist organizations.
This includes setting stringent conditions on foreign financial institutions with accounts in the U.S. if they are found facilitating such transactions.
Scott Johnsson, a notable figure in the digital asset community, voiced significant worries about the law’s broad scope.
He argued that this could essentially allow the president to impose a user-level ban on any digital protocol or smart contract deemed to be associated with foreign sanctions violators.
Johnsson described the law’s implications as far-reaching, potentially forcing users onto regulated, Know Your Customer (KYC)-compliant blockchain networks.
The broad powers granted to the president were introduced through legislative elements reportedly inserted by Senator Mark Warner.
These provisions are derived from the Terrorism Financing Prevention Act, which was announced in December 2023.
The Act empowers the U.S. Treasury Department to address emerging threats involving digital assets.
Under the new law, digital assets are defined broadly, including any digital representation of value recorded on cryptographically secured distributed ledgers.
This definition covers communication protocols, smart contracts, and other software deployed using distributed ledger technology, allowing the president to restrict transactions between U.S. persons and identified foreign entities.
Critics warn that this move could be seen as an effort to control digital assets under the pretext of combating terrorism, pushing users towards regulated, permissioned blockchain networks.
The new law’s implementation and its impact on the digital asset ecosystem will be closely watched, as stakeholders seek to understand its full implications.
