In a bold and controversial move, a new law has granted the U.S. president sweeping powers to block access to digital assets, sparking widespread concern among commentators on social media.

Scott Johnsson, a prominent figure in the digital assets sector, voiced strong criticism on June 6, arguing that the law's broad scope could effectively allow the president to ban any protocol or smart contract deemed problematic by the Treasury Secretary. He stated, "It’s hard to see how this isn’t intended to be a user-level ban power by the President on any protocol/smart contract that’s deemed by the Treasury Secretary to be 'controlled, operated or [made] available' by a foreign sanctions violator. Breathtaking scope and implications to corral users to KYC/permissioned chains."

On June 5, an X user highlighted Senator Mark Warner's strategic legislative moves, which enabled the expansive new powers granted to the president. The law broadly defines "digital assets" to include any digital representation of value recorded on cryptographically secured distributed ledgers.

Under the new legislation, the president has the authority to block transactions between U.S. persons and foreign entities identified as supporting terrorist organizations. This includes imposing strict conditions on foreign financial institutions with U.S. accounts if they facilitate such transactions.

Johnsson warns that the law could push users towards Know Your Customer (KYC)-compliant and permissioned blockchain networks, thereby limiting them to regulated blockchains. He suggests that this move could be perceived as an effort to control digital assets under the pretext of combating terrorism.

The legislative elements allegedly inserted by Warner are said to be derived from the Terrorism Financing Prevention Act, introduced in December 2023, which allows the U.S. Treasury to address emerging threats involving digital assets.

The new law represents a significant shift in the regulatory landscape for digital assets in the U.S., with far-reaching implications for users and the industry. Critics remain vocal, emphasizing the need for careful scrutiny and balanced regulatory measures to protect both security and innovation.