Christopher Wray – the director of the Federal Bureau of Investigation (FBI) – says that Russia overestimated its abilities to use crypto to fight sanctions imposed by the United States and its allies.
Russia and Crypto May Not Be a Perfect Match
Over the past several weeks, many authorities in the U.S. have commented that Russia may try to use crypto to bypass sanctions following its invasion of Ukraine. Members of Congress such as Elizabeth Warren of Massachusetts have drafted bills designed to ensure Russia’s financial abilities are cut off. They have also written letters to Janet Yellen, the Treasury Secretary, to ensure crypto exchanges are cooperating with sanctions.
Warren commented in an interview:
We’re going after two things: trying to squeeze the Russian economy and trying to squeeze those oligarchs, right? The problem is we’re doing that only through the formal banking system. Those oligarchs can move a lot of money or store a lot of money or hide a lot of money through crypto.
In her letter to Yellen, Warren wrote:
Strong enforcement of sanctions compliance in the cryptocurrency industry is critical given that digital assets, which allow entities to bypass the traditional financial system, may increasingly be used as a tool for sanctions evasion.
However, Wray explained in a statement that the U.S. has engaged in some rather “significant seizures” of crypto funds stemming from Russia. He mentioned:
The Russians’ ability to circumvent the sanctions with cryptocurrency is probably highly overestimated on the part of maybe them and others. We are, as a community and with our partners overseas, far more effective on that than I think sometimes they appreciate. We have built up significant expertise both at the FBI and with some of our partners, and there have been some very significant seizures and other efforts that I think have exposed the vulnerability of cryptocurrency as a means of getting around sanctions.
An official of the Treasury Department confirms what Wray has said and mentioned that it’s quite likely Russia is having a hard time using crypto to get around U.S. sanctions. The official said:
It will be extremely challenging to evade our sanctions without detection. The Treasury has been significantly increasing its ability to track virtual currency transactions via partnerships across the [federal government] and with the private sector.
Not Everyone Will Be Cut Off
Both republicans and democrats seem to be anti-Russia at the time of writing. Not long ago, Senator Lindsay Graham of South Carolina said:
Cryptocurrency is rearing its ugly head. As you sanction the [Russian] central bank, which is a good thing, I worry about how cryptocurrency could be used by the Russians to stay afloat.
Despite heavy pressure from members of the U.S. Congress, several executives of known crypto exchanges say that they will not be cutting off Russia completely from using their services.