Senator Jack Reed has submitted an amendment to the GENIUS Act in the Senate that would overturn the Tornado Cash sanctions ruling in the Fifth Circuit, and explicitly give the President and Office of Foreign Asset Control (OFAC) a power they should not have: the ability to ban Americans from using certain smart contracts irrespective of any actual connection to a sanctioned foreign person or property.
Senator Reed’s proposed language is a sweeping grant of authority to the President to arbitrarily ban Americans from using essentially any on-chain technology:
(4) The President may exercise the authorities granted by this subsection with respect to blockchain-enabled smart contracts, or other similar technology, without regard to whether such contracts operate autonomously, can be modified, or are owned.
Right now OFAC and the President only have the authority to sanction foreign persons or property in which a foreign person has a property interest. The legal reasoning in the holding against OFAC in the 5th Circuit, was that no foreign person has an interest in an immutable smart contract like the Tornado Cash tool. Senator Reed’s amendment has a newly proposed definition of “interest” that essentially includes any arguable link to a sanctioned person even an essentially coincidental, hypothetical, or remote connection:
(1) The term `interest’ includes any interest of any nature whatsoever, direct or indirect, present, future, or contingent, and legal, equitable, or beneficial, or otherwise, without regard to whether such interest is legally cognizable.
Does the Islamic Republic of Iran have a future interest in the availability of the ethereum blockchain? Why not? Does North Korea have a non-legally cognizable contingent and indirect interest in open source software for privacy enhancing bitcoin wallets? I guess? With such a flimsy connection as that, Senator Reed wants to hand President Trump and future administrations the otherwise unbound authority to ban Americans from using those software tools without hearing, due process, or accountability. How that can possibly be squared ideologically with a reasonable fear of executive overreach, we cannot fathom. The amendment should be opposed.
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