American Blockchain Independence Act: Restricting Chinese Chains and USDT Usage

A new bipartisan bill has been introduced, aiming to prohibit government officials from utilizing Chinese-developed networks that facilitate cryptocurrency transactions.

This legislation, spearheaded by U.S. Representatives Zach Nunn (R-Iowa) and Abigail Spanberger (D-Va.), is known as the Creating Legal Accountability for Rogue Innovators and Technology (CLARITY) Act. In addition to restricting government officials from engaging with Chinese crypto enterprises, it also puts an end to their access to China-based blockchains, which serve as the foundation for various cryptocurrency trading platforms.

Notably, the bill explicitly forbids U.S. government officials from engaging in transactions with iFinex, the parent company of Tether, which is responsible for issuing the world's largest stablecoin, USDT.

While neither of the bill's authors holds prominent positions within U.S. House of Representatives leadership or on committees, it joins a series of other crypto-related bills that have already gained traction. Some of these bills address security concerns and have received approval from full House committees, indicating that the CLARITY Act may face competition in the legislative process.

The primary objective of this legislation is to safeguard national security intelligence and the private information of American citizens from potential exploitation by foreign adversaries. According to the lawmakers, in the coming decade, every American is likely to have sensitive personal data stored using blockchain technology. Consequently, China's substantial investment in this infrastructure is viewed as posing a significant national security and data privacy threat.

In addition to iFinex, the bill prohibits officials from engaging with The Spartan Network, The Conflux Network, and Red Date Technology Co. The latter is responsible for developing China's national blockchain project and its central bank digital currency (CBDC), also known as digital yuan.

Red Date Technology Co. responded to the bill, clarifying that the BSN Spartan Network is intended for traditional IT purposes, rather than cryptocurrency. The firm also extended an invitation to U.S. agencies to review their source code for further insights.

The legislation also mandates the U.S. Secretary of the Treasury, Secretary of State, and the Director of National Intelligence to formulate a plan to mitigate the risks posed by China and other foreign adversaries in the development of blockchain technologies.

These proposed restrictions follow a prior security-driven ban on government employees' use of TikTok, a popular social media app with ties to China. This action was prompted by allegations from a former employee of TikTok's parent company, ByteDance, who claimed earlier this year that the Chinese Communist Party had exploited a secret "backdoor" in the platform to monitor the locations and communications of activists based in Hong Kong back in 2018.

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