New US Bill Targets Chinese Blockchain Firms

Legislators in the United States introduced a bill on Wednesday that prohibits federal government officials from conducting business with blockchain firms based in China.

The bill’s sponsors said this represents the latest indication of Washington’s suspicion regarding Chinese affiliations in the cryptocurrency industry.

Additionally, the bill expressly prohibits transactions between U.S. government officials and iFinex, the parent company of Tether and the issuer of USDT, the largest stablecoin in the world.

Co-led by U.S. Representatives Zach Nunn (R-Iowa) and Abigail Spanberger (D-Va.), the Creating Legal Accountability for Rogue Innovators and Technology (CLARITY) Act would prohibit government officials from conducting business with Chinese crypto companies and restrict government employees’ access to China-based blockchains, which serve as the foundational networks for cryptocurrency trading platforms.

Both of the bill’s authors do not occupy prominent committee positions or be among the leadership of the U.S. House of Representatives.

Additionally, more seasoned legislators are presently advocating for several cryptocurrency-related bills, some of which also address matters of security.

Only a limited number of the initiatives have received full House committee approval and have progressed further along the way; therefore, it is improbable that a novel measure will surpass them in line.

The legislators stated in a statement that the purpose of this most recent legislation is to prevent “foreign adversaries… from having a backdoor to access critical national security intelligence and Americans’ private information.”

On Wednesday, House freshman Nunn stated, “Within the next decade, every American will have confidential, private data stored using blockchain technology; therefore, China’s massive investment in this infrastructure poses a colossal national security and data privacy problem.”

Officials are additionally prohibited from conducting business with The Spartan Network, The Conflux Network, and Red Date Technology Co., which is the architect of the central bank digital currency (CBDC) or digital yuan and China’s national blockchain project.

Additionally, the legislation mandates that the Director of National Intelligence, Secretary of State, and U.S. Secretary of the Treasury formulate a strategy to “prevent the risks posed by the development of blockchain technologies by foreign adversaries, including China.”

The proposed restrictions follow the implementation of a security-driven prohibition by legislators this summer on using TikTok, a popular social media application with Chinese origins, by government employees.

The initiative followed earlier this year’s court filings by a former employee of ByteDance, the parent company of TikTok.

The employee claimed that the Chinese Communist Party monitored the whereabouts and communications of activists based in Hong Kong in 2018 through a covert “backdoor” in the platform’s popular social media application.