A US senator has introduced a bill to restrict the crypto market. It should prevent Russia from escaping sanctions
As the geopolitical conflict between Russia and Ukraine has worsened, Western countries continue to put more sanctions pressure on Russia. This has dealt a noticeable blow to the country’s economy and has prompted many experts to speculate whether Russia could eventually use cryptocurrencies to circumvent sanctions. Experts have previously suggested that such an option is virtually impossible, but discussions on the potential of digital assets at the highest level are ongoing.
The U.S. government is also aware of this: some senators are now calling for very radical measures to stop any such scenario. Senator Elizabeth Warren was among the supporters of such a stance the day before, proposing her own bill to severely restrict the crypto industry.
Will there be sanctions for cryptocurrencies?
The Digital Assets Sanctions Enhancement Act of 2022 was introduced by Senator Warren of Massachusetts this week during a Senate Banking Committee hearing. Among other provisions, the bill expands the ability of President Joe Biden and the US government to take action against crypto exchanges making transactions with Russian cryptocurrencies.
Warren, a long-time critic of digital assets, said on Twitter as recently as last week that she was working on the bill to ensure that “cryptocurrencies are not used by Putin and his cronies to undermine our economic sanctions.” The proposed bill would give US Treasury Secretary Janet Yellen “clear authority” to block US cryptocurrency exchanges and payment platform operators if transactions involving wallets that are associated with a sanctions list from Russia are found to be facilitated.
US Senator Elizabeth Warren
Read also: Crypto exchange Bitfinex will not apply sanctions to regular users from Russia. And here's why
The bill also gives Biden the ability to impose secondary sanctions on Russian entities that help people and organisations in the country circumvent sanctions by using cryptocurrencies. Recall that the number of blocked crypto-addresses could reach tens of thousands in this way, which is the scale of the network of wallets linked in any way to the sanctions lists.
According to Decrypt’s sources, there is also a provision in the bill that would require any US taxpayer to report transactions worth at least $10,000 with any offshore entity to the FinCEN regulator. That is, Warren also wants to “cut off the oxygen” to possible capital flight by Russian oligarchs offshore. Here is a relevant quote.
Putin and his cronies can move, store and hide their wealth using cryptocurrencies, potentially allowing them to circumvent the economic sanctions the US and its partners around the world have imposed in response to Russia’s actions against Ukraine.
US President Joe Biden
Warren introduced the bill along with Senate Armed Services Committee Chairman Jack Reed, Senate Intelligence Committee Chairman Mark Warner and Senate Defense Appropriations Subcommittee Chairman John Tester. The bill is also co-sponsored by seven US senators, all of them Democrats.
Recall that the possibility of Russia and President Vladimir Putin personally using cryptocurrencies to circumvent sanctions has been one of the main subjects of discussion since the geopolitical troubles in Ukraine began. However, for many experts, the prospect of the Russian Federation completely escaping sanctions through crypto, or even on a limited scale, looks very unlikely because of the transparency of most blockchains. A similar point was made by expert and head of DeFi Education Fund Miller Whitehouse-Levin. Here’s his rejoinder.
Digital assets are ill-suited to evading sanctions because, of all the ways to combat restrictions, it is cryptocurrencies that are easiest to monitor.
The power of Bitcoin
It’s possible that the submitted bill is nothing more than another of Elizabeth Warren’s efforts to limit the adoption of the crypto industry. She has previously openly criticised it more than once – calling it a “shadow bank”, calling for all sorts of restrictions on Bitcoin mining, and openly degrading the reputation of the major cryptocurrency.
We think Warren's position is too radical, and she has repeatedly proven that she does not fully understand how blockchain and digital assets work. Therefore, we can assume that crypto-experts will criticize the initiative and the situation will end up only in talks. In addition, representatives of trading platforms have already repeatedly stated their readiness to block interaction with any addresses from the sanctions lists.
What do you think about it? Share your opinion in our millionaires’ cryptochat. There we will talk about other topics related to blockchain and decentralisation.
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