According to reports, the Treasury Department and the White House have warned U.S.-based individuals and companies not to facilitate crypto transactions sent by certain Russian nationals to certain banks and institutions.
The regulations of the Treasury Department’s Office of Foreign Assets Control, which will be in effect March 1, prohibit Americans from using digital currencies to benefit Russia — including its central bank — to try to bypass U.S. sanctions. In an attempt to avoid sanctions, the guidelines defined crypto transactions as “deceptive and structured transactions or deals”.
Janet Yellen, Treasury Secretary, stated that the actions of the department were intended to “significantly limit[ing] Russia’s ability to use assets for its destabilizing activities and target[ing]] the funds Putin’s inner circle depend on in order to support his invasion of Ukraine.” Officials claimed the Treasury Department’s Executive Order 14024 allows it to impose sanctions based upon “harmful foreign activity, including violations of well-established principles under international law.”
The United States, our allies and our partners today are stopping Putin from accessing their war chest to cushion our sanctions and finance his invasion of Ukraine. https://t.co/NtWvxpR28Z
— February 28, 2022, The White House (@WhiteHouse).
President Joe Biden declared on February 24 that the U.S. would impose sanctions against five Russian-based banks and several other elite nationals who had “enriched themselves at cost of the Russian state”. The European Commission stated on Sunday that it will remove Russia’s sanctioned banks and their SWIFT cross-border payments network.
Although crypto is mentioned as a possible way for Russia to avoid sanctions, at least one Treasury official claimed that digital currencies are unlikely to harm international efforts. According to Politico’s Friday report, Todd Conklin, the counselor to the deputy Treasury Secretary, stated that if the Kremlin wanted to launder large amounts through exchanges, then the market would see “a bit more of an increase” than what has actually happened. Conklin’s statement notwithstanding, Bitcoin (BTC), which reached $41,624, did not rise by more than 11% over the past 24 hours.
Bloomberg reported Monday that the White House requested that crypto exchanges be established to prevent Russian businesses and individuals from using digital assets in order to bypass sanctions. Officials said that cryptocurrencies are not an alternative to the U.S. Dollar in Russia. However, authorities will try to combat any misuse of digital assets to avoid sanction.
Related: Treasury official admits that most crypto transactions can be considered legitimate, but anticipates more sanctions
Cointelegraph reported Monday that Mykhailo Fedorov (Ukraine’s minister for digital transformation) urged crypto exchanges not to block Russian addresses. Binance stated that it would not unilaterally freeze millions of accounts from innocent users, while Kraken said the exchange would not do so “without a legal obligation.”