US Treasury Dept Lists Digital Currency as Part of Effort to Punish Russian Government

The Treasury Department and reportedly the White House are warning US-based companies and individuals not to facilitate crypto transactions sent to certain Russian citizens and banks.

Under the regulations of the Treasury Department’s Office of Foreign Assets Control, which will come into effect on March 1, U.S. residents are not allowed to use digital currencies will benefit the Russian government — including the country’s central bank — as an effort to evade US sanctions in response to the invasion of Ukraine. The guidelines equated crypto transactions with “deceptive or structured transactions or transactions” in an effort to evade sanctions.

Finance Minister Janet Yellen said the department’s actions were aimed at “significant limitation”[ing] Russia’s ability to use assets to finance its destabilizing activities, and[ing] the funds on which Putin and his inner circle depend to enable his invasion of Ukraine.” Officials said the additional actions against Russian entities were authorized under Executive Order 14024, which allows the Treasury Department to impose sanctions based on “harmful foreign activities, including violating established principles of international law”.

On February 24, President Joe Biden announced that the US and its allies would impose sanctions on five major Russia-based banks and several elite nationals who “have enriched themselves at the expense of the Russian state”. As the invasion of Ukraine continues and officials appear to look for other ways to financially deter the Russian government, the European Commission said on Sunday it plans to remove the country’s sanctioned banks from its SWIFT cross-border payment network.

While crypto is listed as a possible means for Russia to evade sanctions, at least one Treasury official has reportedly implied that digital currencies are unlikely to undermine international efforts. According to a Friday report from Politico, adviser to Deputy Treasury Secretary Todd Conklin said if the Kremlin were to launder large amounts of crypto through exchanges, the market would perceive “a bit more of a spike” than it has. However, following Conklin’s statement, Bitcoin (BTC) price has risen more than 11% in the past 24 hours to $41,624.

According to a Monday report from Bloomberg, the White House also applied for crypto exchanges prevent Russian individuals and companies sanctioned by the US and its allies from using digital assets to circumvent these restrictions. Officials reportedly said cryptocurrencies are not a substitute for the US dollar in Russia, but authorities would try to fight any misuse of digital assets to avoid sanctions.

Related: Treasury Official Admits Most Crypto Transactions Are ‘Legitimate’, But Still Anticipates Additional Sanctions

Coin-Crypto reported Monday that Ukraine’s digital transformation minister Mykhailo Fedorov has urged crypto exchanges to block addresses of Russian users. However, Binance said it would not “unilaterally freeze millions of innocent user accounts”, while Kraken added that the exchange would not trade “without a legal requirement”.

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