Feel the Heat: US Firms Take a Stand Against Crypto-Related Crime with the Chilly RESTRICT Act (Bill S.686)

In a move that sends ripple effects throughout the international crypto industry, the United States Senate introduced the Restricting the Emergence of Security Threats that Risk Information and Communications Technology Act, or the RESTRICT Act (Bill S. 686). As the name implies, this bill seeks to regulate items that pose a risk to the security of the nation. Receiving bipartisan support, the potential widespread implications have been met with concern, as the vague language poses significant risk to the freedom and innovation of the information technology and cryptocurrency space.

The RESTRICT Act, initially presented as a form of the TikTok ban, is a formal attempt to combat data threats created by foreign adversaries, including the Chinese government. As it stands, Section 315 of the bill would grant the Department of Commerce broad authority to regulate and prevent uses of technologies that involve interests of foreign adversaries, presenting many troubling implications. The bill was also likened to the Office of Foreign Asset Control (OFAC), though the difference being that the proposed legislation does not contain a carve out for protected speech activities.

For the growing crypto industry, the RESTRICT Act could affect cryptocurrency networks and their participants in multiple ways. Although the exact implications have yet to be understood, concerns from advocacy group Coin Center suggests that, in some cases, the broad language of the bill can be used to impede the access Americans’ have to “open source tools or protocols like Bitcoin.” With legal implications of imprisonment for 20 years and fines of up to $250,000 dollars, it’s clear that the vast implications of the act would come with serious consequences.

The US move toward streamlining regulations for the crypto industry has encountered multiple legal roadblocks. Supporters of innovating within the industry faced an unexpected roadblock when the Securities and Exchange Commission (SEC) hit popular crypto exchanges Kraken and Coinbase with fines and warnings. Adding further pressure, regulators shuttered the crypto-friendly Signature Bank, countering the progress made over the past few years. However, despite the government’s attempt to regulate the emerging technology industry, the RESTRICT Act provides a stark reminder that progress has yet to be made in order to safely protect the space.

The RESTRICT Act, a bipartisan bill introduced with good intentions, has the potential to drastically change the ways in which Americans interact with information technology and digital currencies. But with broad implications and unforeseen consequences, it is important for the US to closely evaluate the Act before it is passed in congress. With the potential for censorship and restriction, the bill could have a chilling effect on the ever-growing crypto industry, striking a blow for innovation and progress in the US. Hence, congress should ensure that the bill does not endanger the flexibility and innovation of the industry, as many business owners, developers and miners have grown to rely on the freedom of the space. After all, many of these builders and users have helped to spur on the massive growth of the cryptocurrency industry, and the RESTRICT Act could be the death knell for those freedoms. Its important to remember that the most pressing national security threats are those involving the privacy and technology of its citizens, and the RESTRICT Act must be implemented in a way that both fundamentally defends and preserves those rights.

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Rina Giannino
Journalist venturing into blockchain, Rina has been a follower of the technology since 2019 and finally taken the plunge with a career as a journalist in the industry.