A group of U.S. Senators introduced legislation to ensure that Vladimir Putin and Russian elites do not use digital assets to undermine the international community’s economic sanctions against Russia for its invasion of Ukraine.
The Digital Asset Sanctions Compliance Enhancement Act comes amid concerns that Russian actors may try to evade economic sanctions by using digital currencies. Other countries hit hard by sanctions, including North Korea and Iran, have used cryptocurrency to offset the effects of economic sanctions.
“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,” U.S. Sen. Elizabeth Warren (D-MA), one of the bill’s sponsors, said.
U.S. Sens. Jack Reed (D-RI), Mark Warner (D-VA), and Jon Tester (D-MT) also sponsored the bill.
The Digital Asset Sanctions Compliance Enhancement Act would close potential avenues for evasion of sanctions against Russia by requiring the President to identify foreign digital asset actors that are facilitating evasion of sanctions against Russia and authorizing the President to sanction such actors. It would also provide the Treasury Secretary with the authority to prohibit digital asset trading platforms from transacting with cryptocurrency addresses that are known to be in Russia.
“The U.S. and its allies have imposed some of the strongest sanctions in history to try to stop Putin and his cronies from waging war on Ukraine. A sanctions system without strong authorities to limit evasion using digital assets is like having a security system but leaving the front door open. This bill would clarify Treasury’s authorities and strengthen our sanctions on Putin and his enablers,” Reed said.
The bill is cosponsored by U.S. Sens. Tammy Duckworth (D-IL), Debbie Stabenow (D-MI), Raphael Warnock (D-GA), Chris Van Hollen (D-MD), Tina Smith (D-MN), Catherine Cortez Masto (D-NV), and Bob Menendez (D-NJ).
“In order for the sanctions levied by the United States and our allies to have the maximum impact on Vladimir Putin and his oligarch friends, we must close off avenues they might use to evade those sanctions. This legislation will crack down on foreign actors who help sanctioned Russians use digital assets like cryptocurrencies to circumvent the crippling measures we’ve put in place to punish Russia for its barbaric invasion of Ukraine,” Warner said.
The bill would also direct FinCEN to require U.S. taxpayers engaged in a transaction with a value greater than $10K of cryptocurrency offshore to file FinCEN Form 114.
“Vladimir Putin’s unprovoked war in Ukraine is a threat to democracies everywhere, and if we are going to hold him and his cronies accountable, we have to be sure they aren’t using digital tools to evade sanctions,” Tester said.