Members of Congress like Senator Elizabeth Warren – a democrat of Massachusetts – have written a letter to Janet Yellen, the Treasury Secretary under Biden, to ensure that crypto exchanges are working with the U.S. government to ensure that sanctions imposed on Russia are being fully complied with.
Elizabeth Warren Is Worried Crypto Can Help Russia
Elizabeth Warren – along with Senators Sherrod Brown, Mark Warner, and Jack Reed – want to make sure that crypto exchanges are doing what they can to prevent Russia from engaging in crypto activity to avoid newly-imposed sanctions. Interestingly, several members of the Biden administration have stated they do not believe Russia could use crypto to avoid sanctions even if it wanted to.
This ultimately goes against a new report that the United States’ Justice Department is creating a new task force specifically designed to ensure Russia cannot use digital currency to get around present regulations or launder illicitly garnered funds. If the country was so sure that Russia is not a financial threat in this way, why would it create such an organization?
It appears Elizabeth Warren and her counterparts aren’t taking the bait either and are now working to ensure that all opposition to Russia and its allegedly illicit financial activities is fully enforced. In the letter issued by Warren and her senatorial associates, specific verbiage questions if the Treasury Secretary’s Office of Foreign Assets Control (OFAC) has guidelines in place to make the digital currency world do what is necessary to prevent illegal business from occurring in Russia.
The letter explains:
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.
The letter also says that crypto wallets and dark marketplaces allow individuals and certain entities to hide their money from the world, ensuring it cannot be taken. They are asking that crypto exchanges be required to engage in due diligence to make sure money coming from Russian crypto wallets is not illicit. They are also asking that these funds be turned away and that crypto exchanges do what they can to either prevent transactions from occurring or reversing them if they’ve already taken place.
Can Such Regulations Be Put in Place?
Carol House – director of cybersecurity for the National Security Council – explained:
The scale that the Russian state would need to successfully circumvent all U.S. and partners’ financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state.
Right now, it is unclear if OFAC has the means necessary to enact such regulations given that many of the transactions taking place within the crypto space are largely subject to “voluntary self-disclosure.” The sanctions in question stem from Russia’s invasion of Ukraine roughly two weeks ago.