US asks crypto exchanges to comply with sanctions against Russia

The US has asked cryptocurrency exchanges to comply with Russian sanctions following the invasion of Ukraine by Russia last week. 

As outlined in a report by Bloomberg, the economic sanctions that the US is placing on Russia includes a request by the Biden administration for crypto exchanges to help them prevent Russia avoiding the sanctions imposed on them. 

The Biden administration has recently expanded their sanctions against Russia's central bank, on Monday prohibiting US citizens from conducting business with the bank, and freezing assets within the United States. 

Cryptocurrencies have been highlighted as one of the ways Russia could avoid economic sanctions, placed upon them by the international community. Concerns that Putin may attempt to circumnavigate financial sanctions has led the US to reiterating Biden’s 2021 executive order that bans “deceptive or structured transactions or dealings to circumvent any United States sanctions, including through the use of digital currencies or assets or the use of physical assets”.

The additional sanctions were outlined by a Biden official, who noted in a conference call with CNBC:

“We wanted to put these actions in place before our markets open because what we learned over the course of the weekend from our allies and partners was the Russian Central Bank was attempting to move assets and there would be a great deal of asset flight starting on Monday morning from institutions around the world,” 

As Russia continues its attack on Ukraine, cryptocurrency has been brought to the fore as a means of supporting Ukraine-based aid, with nearly $30 million worth of crypto donations being sent in to support Ukraine’s defence and relief efforts. However, cryptocurrency’s decentralised nature makes  it somewhat of a double edged sword, and Russia’s recent pro-crypto stance means that Russia is able to utilise digital currency as a way to ease some of the financial sanctions.

“Rapidly evolving digital markets have created new ways to subvert heavy-duty penalties that were designed to cut off wealthy Russians and state-backed institutions from the U.S. financial system in the aftermath of the invasion of Ukraine. With Moscow now a hotbed for high-risk exchanges and mixing services — which scramble the ability to track the flow of transactions on public blockchains — crypto marketplaces could blunt attempts to freeze Russian assets.”

Russia’s crypto stance seems pre-determined, having anticipated sanctions from the international community, Russia’s central bank recently changed its stance from anti-crypto to pro-crypto, and therefore enabling the manipulation of cryptocurrency during this time of war. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.