The RESTRICT Act creates blanket authority, with few checks, to ban just about anything linked to a ‘foreign adversary’

An overbroad attempt to ban crypto using these new powers would be open to a court challenge, but the law has worryingly narrow avenues for review

The RESTRICT Act, introduced by Senators Warner and Thune, aims to block or disrupt transactions and financial holdings involving foreign adversaries that pose risks to national security. Although the primary targets of this legislation are companies like Tik-Tok, the language of the bill could potentially be used to block or disrupt cryptocurrency transactions and, in extreme cases, block Americans’ access to open source tools or protocols like Bitcoin.

This bill has several problems, some of which stem from its similarities with the OFAC regime, others that stem from its differences. The Act creates a redundant regime paralleling OFAC without clear justification, it significantly limits the ability for injured parties to challenge actions raising due process concerns, and unlike OFAC it lacks any carve-out for protected speech.

Similarities between IEEPA and the RESTRICT Act

The RESTRICT Act is conceptually similar to the International Emergency Economic Powers Act (IEEPA), the law that empowers OFAC to block Americans from transacting with sanctioned foreign persons. Indeed, the RESTRICT Act would essentially create a parallel sanctions regime administered by the Secretary of Commerce alongside OFAC’s regime (administered by the Treasury Secretary).

As we’ve said many times before, Coin Center does not object to the use of OFAC’s powers under IEEPA to block transactions with actual foreign adversaries, such as transactions to an Iranian individual holding private keys to a Bitcoin address, or to a custodial mixing service that launders North Korean ransomware payments. However, we are very concerned that an overbroad interpretation of those powers could be exploited in order to ban Americans from using entire classes of technologies, even when no foreign adversary has an actual proprietary interest in the technology as a whole. This concern is exemplified by OFAC adding the Tornado Cash immutable smart contracts to the SDN list.

The Restrict Act directs the Secretary of Commerce to ban transactions in which a foreign adversary has an interest, much as IEEPA directs OFAC. We would not object to that power being used narrowly with regard to any particular Bitcoin transaction involving a specific recipient. We would, however, object to an overbroad interpretation of “interest” wherein the Secretary attempted to argue that the entire class of all Bitcoin transactions, for example, is a class of transactions in which U.S. foreign adversaries have an interest. If such an unreasonable and overbroad interpretation of the RESTRICT Act was made, we’d be fighting it in court just like we’re now fighting the Tornado Cash designation by OFAC. All things considered, we’d rather not have these broad and abuse-prone powers being wielded somewhat redundantly by either the Commerce Secretary or OFAC, and it’s not clear why this additional legislation is needed when IEEPA already provides the administration with very broad authority to block transactions with foreigners that threaten our interests.

Differences Between IEEPA and the RESTRICT Act

While the two acts are very similar in the broad powers they give to the executive, there are some differences between IEEPA and the RESTRICT Act that could make fighting overbroad interpretations more difficult if the act was to become law:

  1. The RESTRICT Act does not have a statutory carve-out for transactions dealing primarily in information and protected speech activities, like the Berman Amendments in IEEPA.
  2. It empowers the Secretary of Commerce to make prohibitions without the need for the President to first declare a national emergency, as with the cyber executive order that preceded the Tornado Cash sanctions.
  3. It limits judicial review to the D.C. Circuit, which raises real questions about fairness and access to justice for aggrieved Americans.
  4. It exempts agency action pursuant to the Act from review under the most relevant sections of the Administrative Procedure Act.

Altogether, while the substance of the law is little different from IEEPA, the process for challenging abuses of power is worryingly circumscribed. If the RESTRICT Act was passed into law and misinterpreted to ban an entire open source cryptocurrency protocol, Americans would have trouble bringing a challenge:

  1. The challenge would need to be in the D.C. Circuit, even if many of the aggrieved parties are elsewhere.
  2. It would need to make constitutional rather than statutory arguments about protected speech activities.
  3. The challenge may not be able to make the administrative procedure arguments that we are making in our Tornado Cash case.

A broad and discretionary power to ban and disrupt all manner of information technologies should not be wielded without appropriate oversight and opportunity for review. The RESTRICT Act not only fails to ensure these rule of law protections, in many cases it attempts to subvert them.

Constitutional Concerns

IEEPA’s Berman Amendments are a statutory carve-out from IEEPA that mirrors the First Amendment. Courts have found that the Berman Amendments, in effect, save the statute from potential unconstitutional applications. When plaintiffs challenge a sanctions designation that impacts speech, they can argue that OFAC exceeded its statutory power by contravening the Berman Amendments, rather than making the somewhat more difficult but also more consequential argument that IEEPA, the statute itself, contravenes the Constitution.

In contrast, the RESTRICT Act has no such statutory limitation. Indeed it is deliberately targeted at restraining transactions related to information and information technologies. This targeting may mean that the Act is facially unconstitutional, and should it become law we expect it to be challenged as such.


While the primary purpose of the Act is to address national security concerns, its potential implications for the cryptocurrency space cannot be ignored. The differences between the RESTRICT Act and IEEPA, coupled with the potential constitutional issues, warrant close scrutiny and a cautious approach to ensure that the legislation does not result in unintended consequences for the cryptocurrency ecosystem and Americans’ access to innovative technologies. Coin Center will work to educate policymakers about the pitfalls of this bill as currently drafted and, if it becomes law, will consider a court challenge if it is ever used to sanction open source crypto technology.