America COMPETES Act Would Be Disastrous For Bitcoin Cryptocurrency And More
Jerry Brito, Executive Director of Coin Center expressed: Included in the America COMPETES Act just introduced in the House, and which will very likely pass in some form, is a provision that would be disastrous not just for cryptocurrency but for privacy and due process generally. America COMPETES Act Would be Disastrous for Bitcoin Cryptocurrency and More
Contact Your Representative In Congress and/or Senate Asap:
The so-called “special measures” provision (proposed by jahimes) would essentially give the Treasury Secretary unchecked and unilateral power to ban exchanges and other financial institutions from engaging in cryptocurrency transactions. How would it do this?
Bank Secrecy Act §5318A allows the Secretary to identify a “primary money laundering concern” and take “special measures” to (1) require financial institutions to report information on the concern, and/or (2) prohibit FIs from maintaining accounts related to the concern.
“Special measures” authority is vast power that the Secretary of the Treasury has today, so in the current statute there are checks on that power.
First, the law requires that Treasury engage in a public rulemaking before instituting a prohibition. Second, the secretary can impose a surveillance special measure through a simple order, but its duration is limited to 120 days and must be accompanied by a public rulemaking.
While not full due process, these limitations at least alert the public and gives the public some opportunity to comment on a special measure’s merit or constitutionality.
The new provision would do three things: -Add “certain transmittal of funds” to the list of things that can be banned by the Secretary -Eliminate all public notice and comment requirements -Eliminate the 120-day limitation for measures imposed without regulation.
If adopted into law, this provision would be disaster not just for crypto but for privacy and democratic public process related to *all* types of financial transactions.
It empowers the Secretary to prohibit any (or indeed all) cryptocurrency transactions (or any other kind of transaction) without any process, rulemaking, or limitation on the duration of the prohibition.
This provision was first introduced as an amendment to the national Defense Authorization Act last year by Rep.
After alerting folks in the House and Senate of that amendment’s unintended consequences, it was removed from the final bill that passed. Unfortunately, it’s back verbatim without any improvements.
It still strips out *all* administrative process and duration limitations on the Secretary’s power to condition or prohibit transactions at financial institutions associated with primary money laundering concerns.
It’s time to call your member of Congress and ask that they take action to make sure that notice and comment and duration limitations are not removed from 31 U.S.C. § 5318A as the America COMPETES Act would do.
U.S. Congressman Wants To Scrub Bill Provision That Crypto Advocates Say Is A Potential Disaster
Representative Ted Budd stated that the provision would let the Treasury unilaterally prohibit certain financial transactions without public input.
North Carolina Representative Ted Budd submitted an amendment to the omnibus America COMPETES Act of 2022, specifically targeting the provision that would allow the Treasury Department to impose “special measures,” including surveillance and outright prohibitions, against “certain transmittals of funds.”
As Cointelegraph reported, executives of crypto advocacy group Coin Center had earlier turned the spotlight on the provision, introduced by Connecticut Representative Jim Himes, that would scrap the existing checks — such as the requirement of public consultation and time limits on special measures orders — constraining the Treasury’s power to unilaterally prohibit financial transactions.
If passed in its current form, the provision would deal a major blow not only to the cryptocurrency industry but to “privacy and due process generally,” as Coin Center’s executive director Jerry Brito stated.
Republican Congressman Ted Budd echoed this argument in a statement that read:
“The Treasury Department should not have unilateral authority to make sweeping economic decisions without providing full due process of rulemaking. This draconian provision would not help America compete with China, it would employ China’s heavy-handed playbook to snuff out financial innovation in our own country.”
In a tweet that followed, Budd called the provision in question a “massive mistake.”
Tucking new rules that could adversely affect the crypto industry into huge, “must-pass” pieces of legislation is a practice that first came into the spotlight last year with the appending, without public discussion, of a highly contentious definition of a “digital asset broker” to the Infrastructure Investment and Jobs Act later signed into law.
The primary focus of the 2,912-page America COMPETES Act of 2022 is on remedying supply chain issues to keep the manufacturing and technology sectors of the United States internationally competitive. However, the sprawling bill also includes a host of seemingly unrelated measures and spending authorizations, including a ban on shark fin sales, steps against harassment in science and new liabilities for online marketplaces.
House Passes $350 Billion Competitiveness Bill, But Senate Fight Looms
Bill is aimed at boosting U.S. technology, but also funding for climate and social issues.
The House approved a $350 billion initiative Friday to boost U.S. competitiveness with China and other rivals, but differences with the Senate and emerging partisan divides signaled struggles ahead in reaching a compromise.
The Senate in June passed its $250 billion version of the measure, the U.S. Innovation and Competition Act, on a bipartisan basis. House leaders waited until the past few weeks to put together their own package, called the America Competes Act, as Congress wrestled with other spending proposals.
The House bill passed almost entirely on party lines, in a 222-210 vote. It shares common elements with the Senate bill. Both are aimed at increasing federal support for scientific research and particularly new technologies.
Both bills also provide for substantial new federal incentives to help bring advanced semiconductor manufacturing back to the U. S.—another bipartisan priority.
Intel Corp. cheered the passage of the House version, noting its plans for $43.5 billion in new investment in Ohio, Arizona and New Mexico.
“Funding the [semiconductor incentives] is critical to level the playing field with global competitors, protect our domestic supply chain, invest in U.S. jobs and manufacturing and put us on a path to regain U.S. innovation leadership,” said Al Thompson, vice president of U.S. government relations at Intel.
But Friday’s partisan divide over the House bill—along with differences between the House and Senate approaches—concerned Biden administration officials.
“Delay is the biggest enemy we have right now,” Commerce Secretary Gina Raimondo told reporters following the vote. “My message to everyone is to find common ground quickly…This should take weeks, not months.”
Ms. Raimondo said that the most contentious of the numerous partisan disagreements over the House package concerned its trade-policy changes. House Democrats sought to make more use of trade-policy changes to counter overseas threats while also adding protections for U.S. workers.
One measure would offer new trade-adjustment help to workers affected by pandemic-induced trade and supply-chain disruptions, while also addressing “inherent racial disparities and inequalities in our economy,” according to a House summary.
Other provisions would impose new federal oversight of U.S. cross-border investments in China and remove a loophole that allows for lower-valued products to enter the U.S. from China and some other countries without import duty or customs inspection.
Ms. Raimondo urged lawmakers to find common ground and not let disagreements “bog down this whole negotiation.”
Other differences are between the House and Senate versions and further complicate the final negotiations.
One is over how to use scientific research to counter overseas threats. The Senate for its part focuses largely on encouraging cutting-edge technologies, such as artificial intelligence and quantum computing.
The House, by contrast, wants to give more flexibility to federal science officials to decide which new ideas deserve to be jump-started. The House package also focuses more on global economic challenges and less on the specific threat from China, aides say.
Compared with the Senate, the House also targets more funding and related policy changes toward issues such as climate change, human rights and domestic social inequality. Its version includes $8 billion to help developing countries convert to cleaner sources of energy.
Another difference is the House’s inclusion of a new, $45 billion fund to provide grants and loans to strengthen U.S. supply chains and manufacturing.
The bill’s sponsors say it provides for roughly $350 billion in overall spending, but the impact on deficits would be lower because not all of that money would represent new spending. A final estimate of its cost wasn’t available on Friday.
Republicans accuse House Democrats of using the competitiveness bill as a way to pass unrelated spending proposals, weeks after President Biden’s $2 trillion Build Back Better initiative crashed in the Senate.
“It has become a Frankenstein monster of other things,” said Rep. Mike Gallagher (R., Wis.), citing climate-change spending.
Democrats say their bill will help solve supply-chain issues that are dragging on the economy, fueling inflation and frustrating Americans.
“This bill deals with the independence and self-sufficiency of America in making things here in America that we need to have in order to grow our economy, create jobs and opportunity for our people,” said Majority Leader Steny Hoyer (D., Md.). He has long supported measures to increase manufacturing in the U.S.
Democrats also view countering climate change as a global-competitiveness issue. They note that the package contains dozens of bills that have already passed with bipartisan support.
Senate sponsors predicted that many of the House proposals will have to be removed to ensure Senate passage.
“What candidly will happen [is], we’re going to have to move the policy towards the Senate bill,” said Sen. Todd Young (R., Ind.), who has been working with Majority Leader Chuck Schumer (D., N.Y.) on the Senate bill.
While praising the House for moving on its own competitiveness package, Mr. Schumer said Thursday that lawmakers will “have much more work to do to bridge our two proposals together.”
America COMPETES Act Passes House Without ‘Disastrous’ Provision On Crypto
A provision originally included in the bill had critics saying the Treasury Secretary would not have had limits on surveilling crypto firms suspected of illicit transactions, nor open the matter to include public feedback.
A piece of legislation aimed at addressing supply chain issues to keep the U.S. economy and businesses competitive has passed the House of Representatives — without a provision many in the crypto space had criticized for giving the Treasury Secretary authority to shut down exchanges.
In a 222-210 vote on Friday, the House of Representatives passed the America COMPETES Act mostly along party lines. The provision originally proposed by Connecticut Representative Jim Himes would seemingly have allowed the Treasury Secretary to have fewer limits on surveilling financial institutions with suspected transactions connected to money laundering and not open the matter to include public feedback. However, lawmakers modified the wording earlier this week to safeguard restrictions currently under by the Bank Secrecy Act.
I’m happy to report @jahimes has listened to our voices and looks like the notice and comment protections in the COMPETES Act related to special measures will be retained! This is in a “manager’s amendment” that will be considered later this week. pic.twitter.com/6mAtLD0tF9
Prior to Himes essentially reversing part of his provision, non-profit crypto policy advocate group Coin Center criticized the legislation for potentially giving the Treasury Secretary “unchecked and unilateral power to ban exchanges and other financial institutions from engaging in cryptocurrency transactions.” North Carolina Representative Ted Budd also proposed modifying the provision, calling it a “massive mistake”:
A new provision in the COMPETES Act would allow the Treasury Department to unilaterally prohibit certain financial transactions *without* public input.
“The Treasury Department should not have unilateral authority to make sweeping economic decisions without providing full due process of rulemaking,” said Budd in a Jan. 27 statement. “This draconian provision would not help America compete with China, it would employ China’s heavy-handed playbook to snuff out financial innovation in our own country.”
The bill will likely move to the Senate next, where it may be subject to different amendments from other U.S. lawmakers. If both chambers approve an identical bill, President Joe Biden will be able to sign it into law.
The Competes Act Is No Way To Help The U.S. Economy
Lawmakers should start over, with clearer goals and a focus on getting value for taxpayer dollars.
The House of Representatives recently passed the America Competes Act, a 2,912-page compendium of initiatives in trade and industrial policy supposedly aimed at restoring America’s economic strength and countering China’s gathering commercial power.
Last year, the Senate passed a similarly ambitious measure called the U.S. Innovation and Competition Act. Congress now has to reconcile these bills and devise a package that can command sufficient support in both chambers.
As things stand, the bills include some good ideas worth pursuing, some bad ones that should be dropped, and countless others that haven’t been thoroughly examined. Congress should take the opportunity to narrow the scope of what’s being attempted, clarify its purposes, and examine the separate parts much more skeptically than it has up to now.
Sprawling omnibus measures are much in favor. Except when emergencies really do demand immediate, drastic and wide-ranging interventions, they’re rarely a good idea.
These bills prove the point. Both are packed with ideas only tangentially related (if at all) to the goal of spurring U.S. productive capacity: Quite what measures to conserve coral reefs or develop marine-mammal rescue capabilities are doing in a bill to promote competitiveness is anybody’s guess.
Two other policy-making fads have guided both packages and seriously compounded the risk of unintended consequences. The first is the new disillusionment with liberal trade as a way to spur efficiency and raise living standards; the other is the belief that government oversight and micro-management are the keys to economic success. Neither view, to put it mildly, is well supported by the evidence.
Granted, the bills’ sponsors are contending with some genuine needs. Most notably, the pandemic caused a global shortage of semiconductors — a bottleneck that has caused prices of cars and other products to surge. Chips are a crucial input for many kinds of production, and their manufacture is concentrated in East Asia. This degree of dependence does raise national-security concerns and requires a smart response.
Yet it’s unclear that a $52 billion subsidy for U.S. chip makers, as proposed in the Competes Act, is the right answer — especially if it’s combined, as the bill also seems to envisage, with export controls that might limit where U.S. manufacturers can sell their products.
Supply-chain diversification for vital inputs like chips is indeed important, but getting this right is more complicated than giving subsidies to domestic producers that are already profitable. Prudent support for R&D combined with a multilateral trading regime that promotes competition and diversity of supply is a more promising answer.
You might’ve expected the Chamber of Commerce to welcome efforts to strengthen and subsidize U.S. companies. (It did in fact support the Senate measure.) Its letter to the House on the Competes Act makes for cautionary reading.
Its members would be harmed, it says, by many of the potentially market-suppressing initiatives bundled inside the measure: restrictions on outward investment; changes to rules on anti-dumping and countervailing duties, portending new tariffs that would make inputs more expensive and provoke retaliation by trading partners; closer supervision of imports at U.S. ports, again raising costs; failure to curb the Section 301 tariffs that were widely abused by President Donald Trump’s administration; and more.
These bills have already come a long way. In merged form, they might well become law. That would be unfortunate.
The best thing would be to scrap them both and start over — this time legislating purpose by purpose, with clear and more limited goals, value for taxpayer dollars front of mind, and all due modesty about the competence of government planners.
If that’s too much to hope for, Congress can at least use its further deliberations to look harder at what it’s proposing and devise a leaner and more focused package.