US bill proposes banning government use of China-developed blockchain and Tether’s USDT

WASHINGTON (Reuters) - U.S. lawmakers on Wednesday introduced a bill that would ban federal government officials from doing business with Chinese blockchain companies , according to a statement from its sponsors, the latest in Washington’s skepticism about U.S. relations with China in the cryptocurrency industry.

The bill also explicitly prohibits U.S. government officials from transacting with iFinex, the parent company of Tether, the issuer of the world's largest stablecoin USDT.

The Establishing Legal Accountability for Rogue Innovators and Technology (CLARITY) Act, co-led by U.S. Reps. Zach Nunn (R-Iowa) and Abigail Spanberger (D-Va.), would prohibit government officials from transacting with Chinese cryptocurrency companies and cut off government employees’ access to Chinese blockchains or the networks that underpin cryptocurrency trading platforms.

Neither of the bill's authors is in the leadership of the U.S. House of Representatives, nor do they hold senior positions on committees. Other, more senior lawmakers have been pushing multiple encryption bills, some of which also address security issues. Some of these efforts have been approved by the full House committee and are moving further, so the new measures are unlikely to get ahead of them.

The latest legislation is aimed at ensuring that America's "foreign adversaries ... do not have backdoors to gain access to critical national security intelligence and Americans' private information," lawmakers said in a statement.

"Within the next decade, every American will have sensitive private data stored using blockchain technology, so China's massive investment in this infrastructure raises huge national security and data privacy concerns," Nunn, a freshman member of the House of Representatives this year, said on Wednesday.

The bill also prohibits officials from transacting with The Spartan Network, The Conflux Network, and Red Date Technology Co., Ltd.

The legislation also directs the U.S. Treasury Secretary, Secretary of State and Director of National Intelligence to develop a plan to “prevent risks posed by the development of blockchain technology by China and other foreign adversaries.”