The EU tries to prevent the use of crypto to avoid sanctions against Russia

The EU is considering new measures to ensure that digital assets are not used to avoid sanctions against Russia, since the block tightens its enforcement of the fines imposed last week.

On Wednesday,

EU finance minister and other civil servants discussed the risk that cryptocurrencies could be used to circumvent sanctions, said officials.

among those who submitted a video conference call to action, was Christine Lagarde, the President of the European Central Bank. After the meeting, Bruno Le Maire, the French finance minister, said that steps were taken into account in order to "further increase" the "effectiveness" of the sanctions and to avoid circumvention - also by cryptocurrencies. The Commission is now expected to check proposals for the treatment of the problem.

The discussion in Europe comes, as legislators in the United States and Great Britain also expressed concerns that crypto transactions could become a back door for the money transfer from and from Russia, which undermines the western efforts to isolate the country from the global financial system.

Many large crypto exchanges, including those based in offshore jurisdiction, have undertaken to comply with existing sanctions, but opposed the demands for a blanket ban on trading with Russia. Several exchanges said that far -reaching restrictions would violate normal Russians and run counter to the basic libertarian ideology of cryptocurrencies.

"If people want to avoid sanctions, there are always several methods," Changpeng Zhao, CEO of Binance, told BBC on Wednesday. "You can do it with cash, with diamonds, with gold. I don't think crypto is something special."

During the call, Lagarde spoke out for legislation so that companies that spend crypto-assets or provide associated services should not do business with customers in Russia, according to the people familiar with the meeting. The goal, she argued, be it, be it to avoid the use of digital assets to bypass the sanctions and the decision of this week to separate seven Russian banks from Swift.

In an earlier interview with the FT, EU Economic Commissioner Paolo Gentiloni said that in the past few days, the authorities have determined an increase in the use of cryptocurrencies, which in his opinion could be "a way to avoid the measures that were taken to freeze the assets in Russia."

In the USA, a group of Democrats wrote a letter to Janet Yellen, the finance minister in the Senate influential banking committee, and expressed her concern that cryptocurrencies could be used to circumvent sanctions.

"A strong enforcement of compliance with sanctions in the cryptocurrency industry is of crucial importance, since digital assets that enable companies to avoid the traditional financial system can increasingly be used as an instrument for bypass sanctions", the senators, including Sherrod Brown from Ohio, wrote chairman of the committee, Mark Warner from Virginia, and Elizabeth WarRen from Massachusetts.

The legislators said they were concerned that the Office of Foreign Assets Control, the arm of the Ministry of Finance, which monitors the US sanction policy, "did not develop sufficiently strong and effective procedures for enforcing in the cryptocurrency industry".

The US Ministry of Finance refused to comment on the letter, but a US official noted that it would be difficult for Russia and its wealthy individuals to use cryptocurrency to a considerable extent to avoid sanctions.

"You cannot do a G20 economy with crypto. Large banks in an economy need real liquidity, and the implementation of large transactions in virtual currency is probably slow and expensive," said the official.

The British legislator has also reacted to the risk that crypto is used to avoid or undermine sanctions. "We consider how the United Kingdom can prevent crypto-assets from emerging as loopholes to avoid sanctions together with its allies," said Baroness Penn, a government leadership, on Wednesday in the House of Lords.

The British MP Tom Tugendhat, chairman of the Committee on Foreign Affairs, and Tory colleague Lord Sarfraz wrote to the Financial Conduct Authority this week and asked the supervisory authority to issue new guidelines for crypto companies to the sanction regime. "There is still a considerable risk that Russian individuals and organizations that were occupied last week with sanctions continue to act with cryptocurrency values," they said.

The FCA said that "she had" contacted every crypto company registered with us to ensure that they are aware of the sanctions and their responsibilities "and" worked with partners to actively monitor these companies ". "We made crypto companies, banks and others clear that we expect them to concentrate on their sanction controls, and together with our partners we will monitor their actions."

Additional reporting by Eleni Varvitsioti and Martin Arnold and Laura Noonan in London