A new bill requiring a congressional notification before payments from the US Department of State (DOS) rewards using cryptocurrencies emerged as the US Congress raised concerns about sanctions evasion.
The Rewards for Justice Program, a counterterrorism reward program run by the Secretary of State, offers rewards for information that prevents international terrorism. Citing examples of Russia and Belarus as previously sanctioned regimes that have used cryptocurrencies to circumvent sanctions, the bill HR 7338 requires that:
“The Secretary of State shall notify the appropriate congressional committees no later than 15 days before payment of a reward in cryptocurrency.”
Congress highlighted the UN’s findings that 12 million Ukrainian residents would need humanitarian aid and that cryptocurrencies have “been used as an effective cross-border payment tool to send millions to the Ukrainian government, the Ukrainian army and Ukrainian refugees with limited access to financial support . services.”
The bill requires the secretary of state to submit reports to congressional committees explaining why DOS made the decision to pay out rewards in cryptocurrency.
If signed into law, the bill would require the DOS to list every crypto payment previously made. Moreover, the federal department will also have to provide evidence as to why payments in cryptocurrency will encourage whistleblowers to share information compared to rewards in US dollars or other prizes.
In doing so, DOS must present an analysis of how crypto-rewards can undermine the USD’s dominance as the global reserve currency.
Related: The White House OSTP department is analyzing 18 CBDC design choices for the United States
Following US President Joe Biden’s executive order to ensure the responsible development of digital assets, federal agencies joined together to publish a fact sheet to articulate a clear framework for the responsible development of digital assets.
The “first” fact sheet released by the White House consisted of seven sections, namely (1) Protecting Consumers, Investors, and Businesses; (2) Promote access to safe, affordable financial services; (3) Promote financial stability; (4) Promote responsible innovation; (5) Strengthen our global financial leadership and competitiveness; (6) Combating Illicit Finance and (7) Exploring a Digital United States Central Bank Currency (CBDC).
Although some of the sections do not contain much new information, federal agencies recommend the creation of a federal framework for non-bank payment providers in addition to encouraging the use of instant payment systems such as FedNow, which is expected to launch in 2023.