Four Democratic senators on Wednesday expressed concern that Russia could use cryptocurrencies to try to skirt sanctions from the West, The New York Times reports.
Sens. Elizabeth Warren, Mark Warner, Sherrod Brown, and Jack Reed sent a letter to Treasury Secretary Janet Yellen asking for her department’s plans to ensure that crypto companies do not enable Russia to evade sanctions.
“Given the need to ensure the efficacy and integrity of our sanctions program against Russia and other adversaries, we are seeking information on the steps Treasury is taking to enforce sanctions compliance by the cryptocurrency industry,” the letter said.
The west has imposed a slew of economic sanctions, which has sent the ruble reeling. Russian markets have been shut down all week and western companies like Apple, BP, and Shell have announced their own actions to cut off the country for its brutal invasion of Ukraine.
Treasury warned of crypto:
The Treasury in 2021 warned that the rise of cryptocurrencies could harm efforts to punish rogue governments economically.
The New York Times previously reported that some crypto tools would allow Russia to continue to make transactions despite sanctions against their banks.
“These reports are even more troubling because of analyses that suggest that the cryptocurrency industry may not be fulfilling its responsibility to comply with U.S. sanctions,” the senators wrote on Wednesday.
Industry split:
Some major crypto exchanges like Binance and FTX have vowed to comply with the U.S. sanctions but companies gave resisted calls to freeze all Russians’ access to crypto.
“Our mission is better served by focusing on individual needs above those of any government or political faction,” said Kraken CEO Jesse Powell. Cryptocurrencies, he said, are “a weapon for peace, not for war.”
Cryptocurrency trades involving rubles have grown since the sanctions but it’s unclear how much that will alleviate the pain after the value of rubles plummeted.
Industry experts also say the concerns are overblown because law enforcement has shown it can track crypto transactions.
“The inherent characteristics of crypto — transparency, immutability, irreversibility and censorship-proof — don’t lend themselves to financial obfuscation,” said Jorge Pesok, general counsel for the crypto software company Tacen.
