The RESTRICT Act, a bipartisan bill introduced earlier this month into the United States Senate, could be applied in broad and unexpected ways, including to threaten crypto, should it become law, think tank Coin Center warned in its blog.
The bill, formally known as the ‘‘Restricting the Emergence of Security Threats that Risk Information and Communications Technology Act,’’ and informally as the TikTok ban, has been introduced amid suspicions that the Chinese-owned TikTok app gathers user data on behalf of the Chinese government.
The Act gives the Commerce Department new powers that would “comprehensively address the ongoing threat posed by technology from foreign adversaries” by allowing it to “review, prevent, and mitigate information communications and technology transactions that pose undue risk to our national security.”
Under Title 15 of the Code of Federal Regulations, the foreign adversaries of the United States are China (including Hong Kong), Cuba, Iran, North Korea, Russia and the Maduro regime in Venezuela.
According to Coin Center, the bill is conceptually similar to the International Emergency Economic Powers Act that authorizes the Treasury’s Office of Foreign Assets Control (OFAC) to block Americans from transacting with sanctioned parties. Coin Center pointed to OFAC’s sanctioning of Tornado Cash immutable smart contracts as a misuse of that law to ban a class of technology and expressed its concern that:
“The RESTRICT Act creates blanket authority, with few checks, to ban just about anything linked to a ‘foreign adversary.’”
Not only that, the RESTRICT Act would be easier to apply and harder to challenge. “Its potential implications for the cryptocurrency space cannot be ignored, Coin Center said.
If you think the TikTok ban isn’t important, you’ve been missing the big picture – the Restrict Act (Bill S.686) will change the internet at the US currently knows it. It’s not just about TikTok – pic.twitter.com/hBjEHB0tRr
— Freckles (@FrecklesNFrce) March 27, 2023
The bill foresees penalties of imprisonment for 20 years and fines of $250,000. Legal experts say the act is vaguely worded and could be used to restrict a range of technologies, such as virtual private networks, or VPNs. Lead author of the bill, Democrat Mark Warner, said:
“We need a comprehensive, risk-based approach that proactively tackles sources of potentially dangerous technology before they gain a foothold in America.”
Kirsten Gillibrand, coauthor with Cynthia Lummis of the Responsible Financial Innovation Act, is among the sponsors of the bill.