Senator Elizabeth Warren has introduced a bill that aims to target exchanges that allow Russia to circumvent sanctions with cryptocurrencies.
Cryptocurrencies and Russia sanctions: the bill
The new bill is intended to prevent Russian oligarchs from circumventing international sanctions with cryptocurrencies. The bill was announced yesterday at the end of a hearing with Chainalysis CEO Jonathan Levin. In explaining the initiative, the senator stated:
“No one can argue that Russia can evade ALL sanctions by moving ALL its assets into crypto. But for Putin’s oligarchs who are trying to hide you know a billion or two of their wealth, crypto looks like a pretty good option.
And that’s why I’m introducing today my Digital Asset Sanctions Compliance Enhancement Act, along with nine members of the Banking Committee – including the Chairman of the Senate Armed Services Committee, the Chairman of the Senate Intelligence Committee, and the Chairman of the Defense Appropriations Subcommittee – and several other senators.
This is a bill that would authorize the President to sanction foreign crypto firms that are doing business with sanctioned Russian entities and authorize the Treasury Secretary to act”.
Senator Warren’s new anti-crypto bill
The Digital Asset Sanctions Compliance Enhancement Act consists of five key points:
- Requires the President to identify foreign actors of digital assets that facilitate the evasion of sanctions against Russia, and authorizes the President to sanction such actors by prohibiting them from transacting with U.S. persons and freezing their assets.
- Provides the Treasury Secretary with clear authority to prohibit crypto trading platforms from making transactions under US jurisdiction with cryptocurrency addresses that may be in Russia.
- Mandates FinCEN to require US taxpayers who transact more than $10,000 offshore to complete the Foreign Bank and Financial Accounts (FBAR) form 114 to report foreign accounts.
- Requires the Treasury Department to report on its progress in implementing these provisions, providing an opportunity to request resources from the Department to improve implementation and progress in coordinating with foreign partners.
- Requires the Treasury Department to issue a report identifying foreign platforms that are considered high risk for sanctions evasion, money laundering, or other illicit activities.
Fighting Putin or crypto
When reading the bill, one might wonder whether the aim is to fight Russia or the use of cryptocurrencies in general.
Senator Warren officially claims to want to fight the Russian president.
She herself explained:
“Putin and his cronies can move, store, and hide their wealth using cryptocurrencies, potentially allowing them to evade the historic economic sanctions the U.S. and its partners across the world have levied in response to Russia’s war against Ukraine. I’m glad to introduce the Digital Asset Sanctions Compliance Enhancement Act with my colleagues to strengthen our sanctions program and close off any avenues for Russian evasion”.
Senator Warren has always been hostile towards cryptocurrencies. It is clear from the way the bill is structured that the aim is certainly to prevent Russians from using cryptocurrencies to convert their dollars and hide them from sanctions. But it is also true that the law would like to introduce controls on transactions by US citizens and crypto exchanges in general.
It will now be up to the US Congress to decide what to do with it, bearing in mind that the direction given by President Biden’s Executive Order is not to fight crypto and crypto exchanges, but to work towards keeping the US a leader in the sector.