Cryptocurrencies have been getting more policymaker attention and wordplay in recent weeks. A few days ago, U.S. Treasury Secretary Steven Mnuchin labeled cryptocurrencies a “national security issue,” citing their potential use in illicit drugs, tax evasion, extortion, human trafficking and terrorist financing.
It’s good to show concern about such things, but whenever the powers that be start framing financial matters in terms of national security, it is time to check your wallet. That’s because of a dramatic, interesting area of constitutional law called “national emergency powers.” During a time of war and/or declared national emergency, more authority can flow into the executive branch allowing for extraordinary actions.
Consider March 1933, when President Franklin Delano Roosevelt declared a “bank holiday” amidst a nationwide banking panic. FDR issued an executive order effectively closing all the banks in the U.S. He also ordered all Americans to turn in their gold. For legal authority, FDR and his advisers cited the 1917 Trading With The Enemy Act – a wartime source of extraordinary presidential authority. This helps explain FDR’s “as if it were a foreign foe” framing in 1933.
After most Americans turned in their gold, the U.S. government promptly repriced the dollar in terms of gold, penalizing anyone who obeyed the orders.
Language dating back to the Trading With The Enemy Act remains on the books today. Consider 12 U.S.C. 95a, which includes:
During the time of war, the President may, through any agency that he may designate, and under such rules and regulations as he may prescribe, by means of instructions, licenses, or otherwise— (A) investigate, regulate, or prohibit, any transactions in foreign exchange, transfers of credit or payments between, by, through, or to any banking institution, and the importing, exporting, hoarding, melting, or earmarking of gold or silver coin or bullion, currency or securities, and …
How do like them apples?