You Won't Believe This Stupid New Law Against Cash And Bitcoin

 A controversial new Congressional bill regarding digital currency has  just been introduced by Sen. Chuck Grassley (R-IA). The bill would  require the Secretary of Homeland Security to work with the Commissioner  of U.S. Customs and Border Protection in order to put forward a "border  protection strategy to interdict and detect prepaid access devices,  digital currencies, or other similar instruments, at border crossings  and other ports of entry for the United States." This bill, if passed,  would have significant implications for digital currency holders around  the world.

Background of U.S. Bill S.1241

The proposed bill, designated U.S. Bill S.1241,  was introduced on May 25 of this year and co-sponsored by Sen. Diane  Feinstein (D-CA), Sen. John Cornyn (R-TX), and Sen. Sheldon Whitehouse  (D-RI). The bipartisan group of Senators who have put the bill forward  hope that it will deter individuals entering the United States from  bringing in undetected and undeclared assets in the form of digital currencies such as Bitcoin and Ethereum. A portion of the bill stipulates that the Department of Homeland  Security and the U.S. Customs and Border Protection agency would devise  "an assessment of infrastructure needed to carry out the strategy" of  blocking these undeclared funds from entering the country. The Secretary  of Homeland Security and the Commissioner of U.S. Customs and Border  Protection would be required to present their findings to Congress  within 18 months of the passage of the bill.

Implications for Travelers

Travelers entering the United States at the border are already  obligated to declare any currency holdings of $10,000 or more,  regardless of whether or not custom officials might have the means to  detect those holdings. While digital currencies occupy a somewhat  unusual place in many portions of finance law, a report by Smaulgld  suggests that the situation is relatively clear in this case. Because  digital currencies technically accompany a holder anywhere that he or  she goes, including across a border, that traveler would need to declare  his or her entire cryptocurrency portfolio every time he or she enters  the United States. This is different from the requirements of travelers  who hold bank accounts and/or precious metals valued at more than  $10,000 which are stored outside of the country. 

How would the federal government develop an infrastructure to detect  foreign holdings including digital currencies? It is possible that the Foreign Account Tax Compliance Act  could be expanded to regulate foreign cryptocurrency exchanges.  Alternatively, a global monitoring system could be put in place to watch  over blockchain ledgers. Beyond that, there are a number of measures  that agencies could take at the border to deter travelers from  withholding information, including extreme vetting systems and harsh  penalties for nondisclosure. Regardless, it is safe to assume that the  cryptocurrency community, famously opposed to central regulation, will have something to say about this bill.

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