US and EU double down on measures against Russia potentially using crypto to evade sanctions

US and EU double down on measures against Russia potentially using crypto to evade sanctions

As a result of a report suggesting that Vladimir Putin’s aides tried to bypass sanctions by using cryptocurrency in foreign nations, the United States and European Union announced new actions against Russia’s economy.

The White House announced Friday that leaders from the United States of America, Canada, France and Germany will take additional measures to economically isolate Russia as a result of President Vladimir Putin’s military intervention in Ukraine. This announcement bans imports from many Russian goods and prohibits the export of luxury goods. It also provides guidance to the U.S. Treasury Department on how to monitor Russia’s attempts at evading existing sanctions.

The White House stated that “Treasury’s extensive actions against Russia require all U.S. individuals to comply with Sanction Regulations regardless of whether a transaction was denominated using traditional fiat currency, or virtual currency.” “Treasury closely monitors any attempts to circumvent or violate Russia’s-related sanctions through the use virtual currency and is committed using its broad enforcement authority to enforce compliance and to stop violations.”

We had a productive conversation with @POTUS. I gave him an assessment of the battlefield and informed him about the crimes committed by Russia against the civilian population. We agreed to take further steps to support Ukraine’s defense and to increase sanctions on Russia.
Volodimir Zelens’kii, @ZelenskyyUa, March 11, 2022

This policy by the United States is part of a coordinated effort between the United States and G7 countries to “collectively increase pressure on Putin” as well as impose financial restrictions on Russia. The European Commission announced Wednesday that its member countries had agreed to amend regulations in order to ensure “even more effectively” that Russian sanctions can’t be circumvented. This included mentioning possible use of crypto assets.

Ursula von der Leyen, President of the European Commission, stated that officials would begin imposing sanctions against Russia on Saturday. Although many EU members haven’t said they would impose restrictions on Russia’s oil and gas production similar to those announced by Joe Biden earlier this week. Von der Leyen stated that there would be a “big ban” on European investment in Russia’s energy sector.

2. Keep pressing Putin’s closest Russian officials. 3. To circumvent sanctions, make sure the Russian state and its elites can’t use crypto assets. 4. We ban the export of EU luxury goods to Russia.
— Ursula von der Leyen (@vonderleyen) March 11, 2022

Individuals and businesses that deal in crypto have been warned by regulatory agencies and government departments from many countries who have enacted such economic measures against Russia. Bloomberg reported Friday that the U.S. Justice Department would form a task force to freeze or seize crypto assets of wealthy Russian citizens. It will also investigate banks and crypto companies that aid entities subject to sanctions for money laundering. The Financial Conduct Authority and Office of Financial Sanctions Implementation in the United Kingdom issued a joint statement urging crypto firms to “play your part in ensuring sanctions are enforced.”

According to the U.K. regulators, financial sanctions regulations don’t distinguish between crypto assets from other types of assets. “Using crypto assets to bypass economic sanctions is a crime.”

Related: Crypto gives Russia no way to escape Western sanctions

Many industries have been affected by the economic sanctions against Russia that were swift. In the past seven days, all private businesses including those of McDonald’s fast-food chain and major bank Goldman Sachs as well as credit card companies like Visa and Mastercard cut all ties with Russia.

Although some U.S. officials claim that Russian businesses and individuals will have difficulty using crypto to evade these sudden and extensive sanctions, Reuters reported Friday that they might be looking to the United Arab Emirates to find solutions. According to the news outlet, multiple inquiries had been received by crypto firms about the use of crypto to buy property or liquidate large quantities of digital assets.

An unnamed realty broker who partnered with a crypto company said, “We’ve seen a lot more Russians and Belarusians coming to Dubai. They bring whatever they can bring.

Some crypto exchanges refused to block Russian addresses. Coinbase and Kraken, both based in the United States, said that they would block assets belonging to individuals named in the sanctions. Binance, a crypto exchange, stated that users who have accounts with sanctioned Russian banks will not be allowed to use them and the platform cannot accept payments from Mastercard or Visa cards issued in Russia.

The truth is that there are approximately 350 banks in Russia. Only a few are on the sanctions list. Everyone is focused on crypto. (PS: None of them work with cryptocurrency exchanges.
— CZ Binance (@cz_binance) March 7, 2022

The situation between Russia, Ukraine and China is still evolving. Despite the fact that Ukraine has been bombarded by Russian missile strikes since February 24, Mykhailo Fedorov (the minister of digital transformation in Ukraine) continues to tweet to call for major financial companies and those involved with crypto to cease doing business with Russia.

Today, the whole democratic world is united against Russia in order to punish these bloody invaders economically. I urge @tether_to @paoloardoino stop all transactions with Russians Peace!
— Mykhailo Fedorov, @FedorovMykhailo, March 11, 2022

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