Digital Asset Sanctions Compliance Enhancement Act of 2022

The term appropriate congressional committees and leadership means—

(A) the Committee on Banking, Housing, and Urban Affairs, the Committee on Foreign Relations, and the majority and minority leaders of the Senate; and

(B) the Committee on Financial Services, the Committee on Foreign Affairs, and the speaker, the majority leader, and the minority leader of the House of Representatives.

The term digital assets means any digital representation of value, financial assets and instruments, or claims that are used to make payments or investments, or to transmit or exchange funds or the equivalent thereof, that are issued or represented in digital form through the use of distributed ledger technology.

The term digital asset trading platform means a person, or group of persons, that operates as an exchange or other trading facility for the purchase, sale, lending, or borrowing of digital assets.

The term digital asset transaction facilitator means—

(A) any person, or group of persons, that significantly and materially facilitates the purchase, sale, lending, borrowing, exchange, custody, holding, validation, or creation of digital assets on the account of others, including any communication protocol, decentralized finance technology, smart contract, or other software, including open-source computer code—

(i) deployed through the use of distributed ledger or any similar technology; and

(ii) that provides a mechanism for multiple users to purchase, sell, lend, borrow, or trade digital assets; and

(B) any person, or group of persons, that the Secretary of the Treasury otherwise determines to be significantly and materially facilitating digital assets transactions in violation of sanctions.

The term foreign person means an individual or entity that is not a United States person.

The term United States person means—

(A) an individual who is a United States citizen or an alien lawfully admitted for permanent residence to the United States; or

(B) an entity organized under the laws of the United States or any jurisdiction within the United States, including a foreign branch of such an entity.

Not later than 90 days after the date of the enactment of this Act, and periodically thereafter as necessary, the President shall submit to Congress a report identifying any foreign person that—

(1) operates a digital asset trading platform or is a digital asset transaction facilitator; and

(A) has significantly and materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of any person with respect to which sanctions have been imposed by the United States relating to the Russian Federation, including by facilitating transactions that evade such sanctions; or

(B) is owned or controlled by, or acting or purporting to act for or on behalf of any person with respect to which sanctions have been imposed by the United States relating to the Russian Federation.

The President may exercise all of the powers granted to the President under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) to the extent necessary to block and prohibit all transactions in property and interests in property of a foreign person identified in a report submitted under subsection (a) if such property and interests in property are in the United States, come within the United States, or are or come within the possession or control of a United States person.

The President may exercise all authorities provided under sections 203 and 205 of the International Emergency Economic Powers Act (50 U.S.C. 1702 and 1704) to carry out this section.

A person that violates, attempts to violate, conspires to violate, or causes a violation of this section or any regulation, license, or order issued to carry out this section shall be subject to the penalties set forth in subsections (b) and (c) of section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) to the same extent as a person that commits an unlawful act described in subsection (a) of that section.

The President may waive the imposition of sanctions under this section with respect to a person if the President—

(1) determines that such a waiver is in the national security interests of the United States; and

(2) submits to Congress a notification of the waiver and the reasons for the waiver.

This section shall not apply with respect to activities subject to the reporting requirements under title V of the National Security Act of 1947 (50 U.S.C. 3091 et seq.) or any authorized intelligence activities of the United States.

The authority to block and prohibit all transactions in all property and interests in property under subsection (b) shall not include the authority or a requirement to impose sanctions on the importation of goods.

In this paragraph, the term good means any article, natural or manmade substance, material, supply or manufactured product, including inspection and test equipment, and excluding technical data.

(1) determines that exercising such authority is important to the national interest of the United States; and

(2) not later than 90 days after exercising the authority described in paragraph (1), submits to the appropriate congressional committees and leadership a report on the basis for any determination under that paragraph.

Not later than 120 days after the date of enactment of this Act, the Secretary of the Treasury shall submit to the appropriate congressional committees and leadership a report on the progress of the Department of the Treasury in carrying out this Act, including any resources needed by the Department to improve implementation and progress in coordinating with governments of countries that are allies or partners of the United States.

Not later than 120 days after the date of enactment of this Act, and every year thereafter, the Secretary of the Treasury shall submit to the appropriate congressional committees and leadership and make publicly available a report identifying the digital asset trading platforms that the Office of Foreign Assets Control of the Department of the Treasury determines to be high risk for sanctions evasion, money laundering, or other illicit activities. Any exchange included in the report may petition the Office of Foreign Assets Control for removal, which shall be granted upon demonstrating that the exchange is taking steps sufficient to comply with applicable United States law.