Representatives Zach Nunn (Republican) and Abigail Spanberger (Democrat) tabled a Bill that aims to protect the United States from the blockchain activities of “China and other foreign adversaries”. It also includes defending the status of the dollar. This might be why iFinex, the parent of the largest stablecoin Tether is on the list.
The Bill primarily prevents any government spending associated with the listed networks.
Spanberger previously worked for the CIA and is a member of the Permanent Select Committee on Intelligence. And Nunn is on a Financial Services subcommittee that covers national security and illicit finance.
“Within the next decade, every American will have sensitive, private data stored using blockchain technology,” said Rep. Nunn. “China’s heavy investment in this infrastructure poses a colossal national security and data privacy problem. If we don’t act now, this will be a disaster 1,000 times worse than China’s ownership of TikTok.”
Apart from banning government involvement, the legislation requests a report on actors in the blockchain and DLT sectors. It requires “A description of what harms such countries, proxies, firms, and technologies cause to United States interests and sanctions enforcement, the use of the United States dollar, and international anti money laundering and countering the financing of terrorism standards.”
They also ask for an impact assessment on the status of the dollar as the world reserve currency.
The Chinese blockchain connection
Apart from iFinex, the four other listed networks are the Blockchain-based Services Network (BSN), its international sister the BSN Spartan Network, Hong Kong’s Red Date Technology (a co-founder of BSN and Spartan) and the Conflux Network.
BSN is a Chinese multi blockchain network that aims to provide SMEs affordable access to blockchain services. China’s State Information Center (SIC) initiated the platform along with Red Date, China Mobile and China UnionPay.
Red Date is a common denominator between BSN and Spartan, which aims to be independently governed in Singapore. After relocating from China to Hong Kong, Red Date received a $30 million funding round two years ago led by a subsidiary of Saudi Aramco. Other backers are from Hong Kong, Thailand and “clients” of Switzerland’s Pictet bank.
Red Date responded in a statement saying “The BSN Spartan Network is completely open source and we welcome agencies from the US or any government to review the source code and make their own conclusions about the technology.” It highlighted the governing foundation has members from the USA, Asia and Europe. And that Red Date has an equal vote to other members. That said, Red Date is the original architect and the network’s primary driver.
Red Date is also launching the UDPN, an international payments network that uses blockchain. The Bill didn’t mention the UDPN.
While BSN and Spartan use public blockchain technology, they don’t use cryptocurrencies in line with China’s stance.
In contrast, the Conflux Network does. In various press announcements Conflux has touted itself as “the first regulatory compliant public blockchain in China”. Conflux worked with State-owned China Telecom to create a Blockchain SIM (BSIM) card that stores private keys for a blockchain wallet. The intention of using the SIM is to make it less vulnerable to malware.
Some believe any news is good if it raises a company’s profile. Conflux’s coin rose by 6% on the news, although it has since lost some of the ground. It currently has a market capitalization of more than $600 million.