{"id":227045,"date":"2022-03-24T19:00:27","date_gmt":"2022-03-24T19:00:27","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=227045"},"modified":"2022-03-25T04:07:30","modified_gmt":"2022-03-25T04:07:30","slug":"cato-institute-slams-sen-warrens-sanctions-evasion-bill-collateral-damage","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/cato-institute-slams-sen-warrens-sanctions-evasion-bill-collateral-damage\/","title":{"rendered":"Cato Institute slams Sen. Warren\u2019s sanctions evasion bill: \u201ccollateral damage\u201d"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Last week U.S. Senator Elizabeth Warren (D-MA), along with ten other democrat senators, introduced a bill to block cryptocurrency companies from conducting business with sanctioned companies, fearing cryptocurrencies might constitute a vehicle for evading sanctions against Russia in the ongoing war with Ukraine.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In short, the Digital Asset Sanctions Compliance Enhancement Act of 2022, as the <\/span><a href=\"https:\/\/cryptoslate.com\/heres-how-the-new-sanctions-bill-could-hurt-the-crypto-industry\/\"><span style=\"font-weight: 400;\">bill<\/span><\/a><span style=\"font-weight: 400;\"> is named, would allow the U.S. president to add non-U.S.-based crypto companies to the sanctions list if they support sanctions evasion. As Sen. Warren is well known for her disdain of cryptocurrencies in general, this bill is accused of introducing sweeping rules that may affect software developers and network node operators, among others, that have no intention or even knowledge of blockchain transactions involving sanctions evasion.<\/span><\/p>\n<h2><strong>Unexpected consequences and collateral damage<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Sen. Warren\u2019s bill has received a host of <\/span><a href=\"https:\/\/www.coincenter.org\/new-crypto-sanctions-bill-targets-publishing-code-facilitating-transactions\/\"><span style=\"font-weight: 400;\">criticism<\/span><\/a><span style=\"font-weight: 400;\"> from crypto advocates such as Coin Center, Blockchain Association and others. Adding to the criticism, the libertarian think tank Cato Institute published a <\/span><a href=\"https:\/\/www.cato.org\/blog\/senate-democrats-call-emergency-act-target-crypto-sanctions\"><span style=\"font-weight: 400;\">blog post<\/span><\/a><span style=\"font-weight: 400;\"> yesterday saying Warren\u2019s bill will have unexpected consequences and cause \u201ccollateral damage\u201d to system participants of various kinds, while also pointing out that there is no evidence to suggest cryptocurrencies are being used by Russia or its oligarchs to evade sanctions, and that cryptocurrencies, such as bitcoin (<\/span><a href=\"https:\/\/cryptoslate.com\/coins\/bitcoin\/\"><span style=\"font-weight: 400;\">BTC<\/span><\/a><span style=\"font-weight: 400;\">) and ether (<\/span><a href=\"https:\/\/cryptoslate.com\/coins\/ethereum\/\"><span style=\"font-weight: 400;\">ETH<\/span><\/a><span style=\"font-weight: 400;\">) would be a poor tool for evading sanctions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to Cato Institute\u2019s post, President Biden\u2019s <\/span><a href=\"https:\/\/cryptoslate.com\/crypto-markets-lose-100-billion-as-biden-signs-executive-order-on-digital-assets\/\"><span style=\"font-weight: 400;\">executive order<\/span><\/a><span style=\"font-weight: 400;\"> on cryptocurrency mentioned the word \u201cillicit\u201d no less than 24 times, and last week\u2019s Senate <\/span><a href=\"https:\/\/www.banking.senate.gov\/hearings\/understanding-the-role-of-digital-assets-in-illicit-finance\"><span style=\"font-weight: 400;\">hearing<\/span><\/a><span style=\"font-weight: 400;\"> was titled \u201cUnderstanding the Role of Digital Assets in Illicit Finance\u201d.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Similarly, according to the Cato Institute, Senator Elizabeth Warren used that hearing to introduce a bill that might have been better had the expert witnesses been given the opportunity to weigh in on it before its introduction.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cThroughout the hearing, the experts repeatedly confirmed that there is no evidence to suggest cryptocurrencies are being used by Russia or its oligarchs to evade sanctions. In fact cryptocurrencies would be a poor tool for evading sanctions. And while one might be tempted to think legislation that targets something nonexistent would be harmless, Senator Warren\u2019s legislation would have no shortage of collateral damage,\u201d the post reads.<\/span><\/p>\n<h2><strong>Held liable by simply creating open-source software<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Despite the bill\u2019s intention to address the risk that people on the sanctions list will use cryptocurrencies to evade the law, the bill reaches far beyond the Russian oligarchs and banks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to Cato Institute, there are two drastically different groups of people being described in the proposed legislation. The first group is made up of those who \u201csignificantly and materially\u201d assist with sanctions evasion. And although officials at the FBI, Treasury, and White House have all stated that cryptocurrencies <\/span><a href=\"https:\/\/cryptoslate.com\/why-russia-cant-use-crypto-to-evade-sanctions\/\"><span style=\"font-weight: 400;\">cannot be used<\/span><\/a><span style=\"font-weight: 400;\"> effectively by Russia to evade sanctions, the language in the bill is still correct to note that active sanctions evasion is an illegal activity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, the second group being described is far broader as it captures anyone that \u201cprovided financial, material, technological support for, or goods or services to or in support of\u201d anyone sanctioned. In practice, this means someone could be held liable for assisting sanctions evasion by simply creating open-source software.<\/span><\/p>\n<blockquote><p><strong>\u201cTaking the idea out of the realm of crypto, this would be akin to Microsoft being liable for someone plagiarizing an essay in a Word document or Gucci being liable for someone carrying stolen cash in their pocketbook,\u201d Cato Institute\u2019s post says.<\/strong><\/p><\/blockquote>\n<h2><strong>\u201cThis is something out of Putin\u2019s playbook\u201d<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">This level of liability is clearly overly broad, says the post. As Coin Center\u2019s Jerry Brito and Peter van Valkenburgh <\/span><a href=\"https:\/\/www.coincenter.org\/new-crypto-sanctions-bill-targets-publishing-code-facilitating-transactions\/\"><span style=\"font-weight: 400;\">warned<\/span><\/a><span style=\"font-weight: 400;\">, \u201cThe mere fact that a stranger is using your software or network throughput to do something illegal without your knowledge cannot be a trigger for the crushing penalties that are sanctions.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Worse yet, as per the blog post, the bill would also give the Treasury secretary full discretion to prohibit U.S.-based exchanges, software developers, and miners from engaging with anyone in Russia\u2013\u2013not just those on the sanctions list.<\/span><\/p>\n<blockquote><p><strong>\u201cSo in the name of targeting a specific group of bad actors, the bill seeks to target even those that might unknowingly have been involved. And in targeting all of these people, it would call on the president and Treasury secretary to exercise unchecked powers. This is something out of Putin\u2019s playbook or that of the Chinese government, not the United States,\u201d the blog post concludes.<\/strong><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Last week U.S. Senator Elizabeth Warren (D-MA), along with ten other democrat senators, introduced a bill to block cryptocurrency companies from conducting business with sanctioned companies, fearing cryptocurrencies might constitute a vehicle for evading sanctions against Russia in the ongoing war with Ukraine. In short, the Digital Asset Sanctions Compliance Enhancement Act of 2022, as [&hellip;]<\/p>\n","protected":false},"author":962,"featured_media":227047,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[76799,60793,60208,11],"tags":[77550,77549,77332,77057,77445,77443],"prediction_market_topic":[],"post_folder":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.9 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Cato Institute slams Sen. Warren\u2019s sanctions evasion bill: \u201ccollateral damage\u201d<\/title>\n<meta name=\"description\" content=\"Cato Institute denounces Senator Warren\u2019s bill to address cryptocurrencies as a tool for evading economic sanctions. 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