US and EU double down on measures against Russia that may be using crypto to evade sanctions

The United States and the European Union have announced new actions targeting the Russian economy and wealthy individuals as a report suggests Vladimir Putin’s allies have attempted to evade sanctions using cryptocurrency abroad.

In a Friday announcement, the White House said The leadership of the United States, Canada, France, Germany, Italy, Japan, the United Kingdom and the European Union will take additional measures to economically isolate Russia in response to President Vladmir Putin’s military invasion of Ukraine. The announcement includes a ban on the import of many Russian goods, a ban on the export of luxury goods to Russia and guidelines for the US Treasury Department to follow the country’s attempts to circumvent existing sanctions.

“The Treasury Department’s extensive actions against Russia require all U.S. citizens to comply with sanctions rules, whether a transaction is denominated in traditional fiat currency or virtual currency,” the White House said. “Treasury is closely following all efforts to circumvent or violate Russia-related sanctions, including through the use of virtual currencies, and is committed to deploying its broad-based enforcement authorities to act against violations and promote compliance.”

The United States’ policy is part of a coordinated effort with the European Union and the G7 countries to “collectively increase pressure on Putin” and impose additional financial restrictions on Russia. On Wednesday, the European Commission said its member states agreed to change the regulations with the aim of “ensuring even more effectively that Russian sanctions cannot be circumvented, including through Belarus,” pointing specifically to the potential use of crypto-currencies. assets.

European Commission President Ursula von der Leyen said officials will introduce measures against Russia from Saturday. While many EU members have not said they will impose restrictions on Russian-produced oil and gas, similar to measures announced by US President Joe Biden earlier this week, von der Leyen said there would be a “major ban” on European investments in the Russian energy sector.

Regulators and government agencies in many countries that are taking such economic measures against Russia have also warned individuals and companies trading crypto about possible enforcement measures. Bloomberg reported on Friday that the US Department of Justice will form a new task force aimed at freezing or seizing crypto assets belonging to wealthy Russian individuals, as well as investigating banks and crypto companies behind helping entities under sanctions referred to as money laundering. In the United Kingdom, the Financial Conduct Authority and the Office of Financial Sanctions Implementation issued a joint statement warning crypto firms to “play their part to ensure sanctions are enforced.”

Financial sanctions rules do not differentiate between cryptoassets and other forms of assets. “Using cryptoassets to evade economic sanctions is a criminal offense.”

Related: Crypto Offers Russia No Way Out of Western Sanctions

The economic measures against Russia were swift and affected many industries. Private companies from fast food chain McDonald’s, major bank Goldman Sachs and credit card companies including Visa and Mastercard have cut all ties with the country in the past seven days.

While some US officials have said Russian individuals and companies will struggle to use crypto to evade such sudden and extensive sanctions, a Friday report from Reuters said. suggested perhaps they turn to the United Arab Emirates for solutions. The news outlet reported that crypto firms in the country had received multiple inquiries about using crypto to buy real estate or liquidate large amounts of digital assets.

“We have seen a lot of Russians and even Belarusians come to Dubai and bring everything they can bring, even in crypto,” said an unnamed broker whose company partnered with a crypto firm.

Some crypto exchanges have rejected requests from Ukraine to block all addresses of Russian users. However, Coinbase and Kraken – both headquartered in the United States – said they would freeze assets of individuals named in sanctions. Crypto exchange Binance said users with accounts with sanctioned Russian banks would not be able to use it, nor would the platform be able to accept payments from Mastercard and Visa cards issued in Russia.

The situation between Russia and Ukraine is still developing. As Ukraine has been bombarded by Russian missile strikes since Feb. 24, Mykhailo Fedorov, the country’s minister of digital transformation, continues to tweet urging financial services firms – including companies involved in cryptocurrencies – and major corporations to stop doing business with Russia. :

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