Could the US start imposing sanctions against cryptocurrency exchanges?

A new bill introduced in the United States gives Biden broad powers to block access to digital assets.

Senator Mark Warner’s strategic amendment to the Intelligence Authorization Act for fiscal year 2025 was published on X on June 5. The law gives the President of the United States broad new powers regarding digital assets.

What is known about the new law?

The law, known as S.4443it was introduced in the United States Senate on June 3. It provides for the approval of funding for the American intelligence community and the granting of legal powers.

The new proposal has already caused great concern in the crypto community. Under the latest amendment to the bill, the president can block transactions between US individuals and foreign organizations that support terrorist organizations. For example, prohibit any type of transaction between any person subject to American jurisdiction and a foreign crypto intermediary.

What the cryptocurrency community says

Financial lawyer Scott Johnsson criticized the law for its broad reach. He said S.4443 means the president can impose a user-level ban on any protocol or smart contract.

Johnsson believes the law may limit users to regulated ones KYC-compliant blockchains. He sees it as an attempt to tighten control over digital assets under the guise of fighting terrorism since Warner’s amendments are borrowed from the Terrorism Financing Prevention Act.

Current regulation of cryptocurrency exchanges in the United States

In March 2013, the Financial Crimes Enforcement Network (FinCEN) classified cryptocurrency exchanges as money services businesses, which required the collection of customer identifying information. Since then, US crypto platforms are required to verify the identity of their users before they can access trading.

How cryptocurrency exchanges work in the United States

To register a cryptocurrency exchange in America several conditions must be met and the issued token can subsequently be considered a security or currency. The legal regulation of cryptocurrencies in the United States depends on federal legislation and that of each state.

Additionally, US citizens or residents should use the domestic exchanges below FinCEN regulations. Attempting to use international platforms can lead to a trading or registration ban if someone is found to be using a US IP address.

Given these regulations and the security risks associated with foreign exchange, US investors are advised to conduct cryptocurrency transactions through domestic platforms.

Regulatory acts

Digital currency businesses must comply with the Bank Secrecy Act (BSA). Depending on their activities, they must register with the relevant federal agencies, such as FinCEN, Securities and Exchange Commission (SEC), or Commodity Futures Trading Commission (CFTC).

To ensure compliance, these organizations must conduct thorough risk assessments to assess their exposure to money laundering and develop robust anti-money laundering personalized programs based on their risk profiles. These programs should include policies, procedures, comprehensive controls, independent compliance testing, dedicated compliance personnel and ongoing training.

The United States has become highly concerned about the cryptocurrency industry

The intersection of digital assets and politics could significantly influence the 2024 US presidential election. As digital assets gain popularity, candidates’ positions on cryptocurrency regulation and blockchain innovation are likely to influence voters.

The impact of crypto politics on the US presidential election will be more critical than ever. This is the first election where major candidates actively discuss cryptocurrency, despite its minor role in previous campaigns when Andrew Yang ran for office.

For example, the former American president Donald Trump started to accept made cryptocurrency donations to his campaign last month, which gave cryptocurrency industry supporters, including Messari CEO Ryan Selkis, a platform to express their beliefs.

Source: Donald Trump’s website

At the same time, the current president of the United States Joe Bidenwhose administration had previously not been faithful to digital assets, suddenly changed its cryptocurrency policy.

The president’s position changed after the Trump campaign portrayed cryptocurrencies as positive. Since then, Democratic members of Congress have voted in favor of cryptocurrency, and the presidential campaign is seeking policy guidance by reaching out to cryptocurrency insiders and experts.

Will the bill be approved?

With the upcoming elections in mind, regulation of the cryptocurrency industry is becoming increasingly crucial for the current administration. However, as the crypto community has become an essential part of the voters, it is not profitable to ignore their interests.

The question of the exception to the provision relating to crypto exchanges and sanctions remains open. It will likely require further refinement before lawmakers make a final decision.

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