US Government Exploring Ways to Sanction Cryptocurrency Use in Russia

The Biden administration is mulling ways to impose additional sanctions against Russia, this time charting into the unexplored waters of cryptocurrencies.

The US government is considering sanctioning Russia’s access to cryptocurrencies, marking an unchartered attempt to further choke off the country’s economic activity. As the Wall Street Journal reports, citing an administration official, the Office of Foreign Assets Control of the US Treasury Department is mulling going after cryptocurrency platforms that may conduct illicit transactions with blacklisted Russian banks.

“OFAC could also go after larger Russian exchanges the same way it has already designated traditional Russian financial institutions,”said Ari Redford, a former senior Treasury Department official. However, the sanctions would need to be designed in such a way that they wouldn’t affect the broader crypto market, thus imposing them may be challenging.

Still, over the past several years, regulatory officials have boosted their oversight of crypto markets, with the power to prevent crypto exchanges from conducting transactions in some countries using certain government-issued currencies, such as the ruble. Indeed, given that crypto markets may become popular given that recently-imposed sanctions are only targeting Russia’s traditional financial systems, they make a strong motivation for the Biden administration.

However, that may be a task difficult to achieve, given that virtual currencies remain outside of the domain of government-regulated financial systems. Although most crypto exchanges are increasingly complying with regulators regarding their clients’ information in the event of wary transactions, peer-to-peer digital currency transactions that forego a central intermediary are growing in popularity, thus making it even more difficult to enact such sanctions.

Information for this briefing was found via the WSJ. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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