House Bill Restricts Use of Blockchain Linked to China

A bipartisan bill presented in the House last week aims to curtail the federal government’s procurement and utilization of blockchain technologies linked to the Chinese Communist Party and other foreign adversaries, raising national security concerns. Representatives Abigail Spanberger (D-Va.) and Zach Nunn (R-Iowa) introduced the legislation on November 8, highlighting its focus on addressing cybersecurity threats associated with Chinese government-affiliated tech entities.

Nunn emphasized the considerable national security and data privacy risks posed by China’s substantial investment in blockchain technology. He stated that the proposed bipartisan measure is crucial to prevent the federal government from inadvertently providing China with access to sensitive national security intelligence and private information of Americans.

Spanberger underscored the bill’s significance in establishing a barrier between the federal government and blockchain technologies owned by the Chinese Communist Party. The objective is to counteract the party’s influence in the global economy and ensure the nation’s competitiveness.

The proposed legislation prohibits federal agencies from acquiring, extending, or renewing contracts for “covered distributed ledger technology and blockchain equipment or services.” The bill specifically identifies five companies, including iFinex Inc., the parent company of stablecoin Tether, which would be prohibited from supplying blockchain technologies and services to the U.S. government.

Within 180 days of the bill’s enactment, the Secretary of the Treasury, the Secretary of State, and the Director of National Intelligence would be required to submit a comprehensive report to Congress. This report would assess the risks associated with covered technologies and services, including potential circumvention of U.S. and international sanctions, particularly through the SWIFT payments system.

In recent years, lawmakers from both parties have expressed concerns about the unauthorized access of personal data, intellectual property, and critical infrastructure services by Chinese-made technologies. Instances such as the government’s failure to identify Chinese-made components in the U.S. electric grid and the controversy surrounding TikTok have heightened these concerns.

While the federal government has taken steps to restrict the use of TikTok on official devices, the sponsors of the bill argue that the potential vulnerabilities posed by blockchain technologies outweigh the risks associated with foreign ownership of popular apps.

Representative Nunn stressed the urgency of acting promptly, asserting that failure to do so could result in a national security disaster far surpassing the concerns associated with China’s ownership of TikTok.