Impossible for Russia to avoid sanctions with crypto, says Fincen Rep

Impossible for Russia to avoid sanctions with crypto, says Fincen Rep

While the conflict in Ukraine continues to escalate, legislators take a closer look at digital assets and how they can be used to commit crime or not.

The bypass of Russian sanctions, some of which speculated that it could be facilitated with digital assets, was a central topic of discussion on Thursday hearing of the banking committee of the Senate with the title "Understanding of the role of digital assets in illegal financing".

When asked whether the Russian President Putin or other sanctioned organizations could use cryptocurrencies to bypass the rules, the witnesses agreed that the probability of this was low.

"I will quote my successor as a consultant of the Deputy Minister of Finance, who recently said: 'You cannot overlook a switch overnight and do a G20 economy with cryptocurrency, there is simply no liquidity'," Michael Mosier, formerly the acting director and current deputy director and commissioner for digital innovation of the Financial Crime Enforcement Network (fincen), said during the hearing.

Michael Chobanian, founder of Kuna Exchange and President of the Blockchain Association of Ukraine, agreed.

"I am the person behind all the numbers, I know how it happens, and it is impossible, physically impossible to transfer large amounts of money from Fiat in crypto," he said.

Senator Elizabeth Warren, D-Mass., also unveiled a new bill on Thursday, the Digital Assets Sanctions Compliance Enhancement Act, which aims to prevent cryptocurrency companies from doing business with sanctioned companies.

"The crypto industry claims that Russians cannot use crypto to hide their wealth," said Warren during the hearing. "This is a draft law that would authorize the president of sanctioning foreign cryptocurrency companies that do business with sanctioned Russian companies and would authorize the finance minister to act."

The senators also expressed concerns about cryptocurrency mining, which has increased in Russia since China's ban in 2021.

"Since the main costs in connection with the mining of cryptocurrency are energy, I am worried that the Russian government will also consider the shining to be a way to avoid sanctions," said Senator Bob Menendez, Dn.J. He added that Russia is 13.6 % of Bitcoin mining worldwide and cited data from the Cambridge-Bitcoin current consumption index.

"Iran has successfully broken down cryptocurrency to its advantage," said Shane Stansbury, a Robinson Everett Distinguished Fellow at the Center for Law, Ethics and National Security and Senior Lecturer Fellow at Duke University School of Law. "There are also many reports about North Korea that it turned to cryptocurrency to finance its regime ... it's a huge problem."

Chobanian disagreed and argued that Russian miners were “ordinary people” who dismantle to earn money and deal with technology.

"But again when you speak of sanctions at government level, what sums do we speak of?" said Chobanian. "It is impossible to replace Bitcoin or another cryptocurrency at government level with US dollars. You cannot transfer a few billion dollars without anyone noticing it on the physical level."

When it comes to persecution of financial crime and the persecution of economic activities, cryptocurrencies offer a great advantage, added Jonathan Levin, co -founder and chief strategy officer from Chainalysis.

"It is often assumed that the cryptocurrency is not as transparent as it actually is," he said. "The fact that the entire industry and all law enforcement and supervisory authorities can have all access to the same information about which services and which companies are behind these transactions enables us to take unprecedented steps to work out illegal activities during weed fighting."

The hearing takes place because the federal government tries to strengthen its supervision of the cryptocurrency industry. The latest implementing regulation of the bid administration, in which the next steps for research and regulation have been outlined around digital assets, has largely been praised by members of the industry who have long emphasized the importance of clear legal guidelines.

"The wrong characterization that Krypto is the Wild West of the illegal finance ... I would see that this is used to open the door to drop a morast of regulations on an industry that offers so much potential for America and our competitive advantage," said Senator Bill Hagerty, R-Tenn.

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The contribution "Impossible for Russia to Evade Sanctions with Crypto, Fincen Rep Says" is not a financial advice.