Janet Yellen, the United States Treasury Secretary, stated Wednesday to the House Financial Services Committee that her department does not see significant use of cryptocurrencies for evading sanctions placed on Russian oligarchs or government agencies. Yellen was repeatedly asked about digital asset security during the annual hearing of the committee on the international financial system.
“We are aware that crypto could be used to evade sanctions. We are closely monitoring that,” Yellen stated. “But I would say that our authority in this area is great and that we will continue to use it.”
It’s difficult to use crypto to evade Sanctions, Yellen assured, noting that blockchains are being “regularly reviewed” and large transactions would be noted. “[Crypto] exchanges are subject to [Anti-Money Laundering/Combatting the Financing of Terrorism] AML/CFT regulations, so they are part of the financial system,” she said. “We have not seen any significant evasion via crypto so far.”
Tuesday’s announcement by the Treasury’s Office of Foreign Assets Control stated that sanctions would be imposed on Garantex, a Moscow-based virtual currency exchange, for not complying with AML/CFT regulations and on Hydra, a Russian-language darknet market Hydra for accepting ransomware attacks. These sanctions were imposed by several U.S. agencies, including the Treasury.
Committee members were not only concerned about crypto-related matters, but also sanctions. Rep. Bill Foster inquired about digital identity verification. Yellen stated that her department has “very broad-ranging equities” in the digital identity space. This is partly because she administers public benefits and tax refunds. She assured Foster that they are “working out the actions that we can take in order to move this agenda.”
Warren Davidson, a Representative from Ohio, expressed concern over the preservation of self-hosted digital wallets. He described them as “self custody of private properties without an intermediary”
Yellen will be speaking at American University in Washington DC about the executive order of President Joe Biden on digital assets and how Treasury reacted to it on Thursday.