Democratic senators explore cryptocurrency sanctions compliance

U.S. Sens. Elizabeth Warren (D-MA), Mark Warner (D-VA), Sherrod Brown (D-OH), and Jack Reed (D-RI) forwarded correspondence to Treasury Secretary Janet Yellen regarding cryptocurrency industry progress in monitoring and enforcing sanctions compliance.

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The senators also expressed concerns regarding criminals, rogue states, and others potentially using digital assets and alternative payment platforms to hide criminal cross-border transactions.

“Given the need to ensure the efficacy and integrity of our sanctions program against Russia and other adversaries, we are seeking information on the steps Treasury is taking to enforce sanctions compliance by the cryptocurrency industry,” the legislators wrote.

The senators cited the Treasury Department’s Office of Foreign Assets Control (OFAC) Sanctions Compliance Guidance for the Virtual Currency Industry report, which officials said was released in October 2021 and outlined best practices for compliance.

“Strong enforcement of sanctions compliance in the cryptocurrency industry is critical given that digital assets, which allow entities to bypass the traditional financial system, may increasingly be used as a tool for sanctions evasion,” the legislators concluded.

There are concerns Russia may use cryptocurrencies to circumvent new sanctions it faces from the Biden administration and foreign governments in response to the recent Ukraine invasion, outlining potential use of dark web marketplaces powered by cryptocurrencies to move funds and conduct transactions, as well as using crypto wallets and mixing services enabling sanctioned entities to transfer and hide their wealth.