January 26, 2022
Another must-pass bill, another rushed policy that severely damages the privacy and constitutional rights of cryptocurrency users.
We’ve just seen language in the America COMPETES Act of 2022 (see page 1482)—a bill ostensibly about economic competitiveness with China—that would strip all administrative procedures and safeguards from the imposition of so-called “special measures” prohibitions in the Bank Secrecy Act while simultaneously expanding authority for such prohibitions to cryptocurrency activities. In brief, it would hand the Treasury Secretary unchecked discretion to forbid financial institutions (including cryptocurrency exchanges) from offering their customers access to cryptocurrency networks. The Secretary may not use this discretion immediately, but it is not power the Department should have.
Allow us to unpack all this and explain why this bill, if it includes the new language, would help the US compete with China not on economic growth and innovation, but on denying citizens due process and human rights.
What are the “special measures” in the BSA?
Authority for so-called “special measures” is at 31 U.S.C. § 5318A. There are five of them. The first four allow the Secretary of the Treasury to direct financial institutions to engage in extraordinary surveillance and recordkeeping about their customer’s transactions (think: every detail of your transaction activities now goes straight to a criminal investigation file) and the fifth allows the Secretary of the Treasury to direct financial institutions to prohibit their customers from transacting at all (think: “we’re sorry but your account is frozen”). These measures can be put in place if the Secretary of the Treasury deems that
reasonable grounds exist for concluding that a jurisdiction outside of the United States, 1 or more financial institutions operating outside of the United States, 1 or more classes of transactions within, or involving, a jurisdiction outside of the United States, or 1 or more types of accounts is of primary money laundering concern,