White House, G7 Say New Guidance Is Coming on Crypto Sanctions Evasion

The White House and Group of 7 announced fresh sanctions against Russia Friday as part of an ongoing push to deter the country from continuing its invasion of Ukraine. For the first time, these sanctions will include crypto-specific guidance.

Concern over whether Russian oligarchs or the government could use cryptocurrencies to avoid the financial hit imposed by a broad-ranging sanctions regime have grown in recent days, with U.S. lawmakers and European officials all expressing concern over the potential. Officials with the U.S. Treasury Department and industry participants have said this is an unlikely possibility.

Friday's announcement by the White House seems to focus more on reiterating for crypto companies that they should comply with sanctions rather than addressing any usage of such sanctions so far.

"The Department of the Treasury, through new guidance, will continue to make clear that Treasury’s expansive actions against Russia require all U.S. persons to comply with sanctions regulations regardless of whether a transaction is denominated in traditional fiat currency or virtual currency," according to a fact sheet published Friday. "Treasury is closely monitoring any efforts to circumvent or violate Russia-related sanctions, including through the use of virtual currency, and is committed to using its broad enforcement authorities to act against violations and to promote compliance."

Treasury spokespeople did not immediately return a request for comment on what the guidance will say or when it will be published.

G7 weighs in

A joint G7 statement also published by the White House specified that this guidance will target the Russian government as well as its proxies, in addition to the oligarchs who are already on multiple sanctions lists.

"We commit to taking measures to better detect and interdict any illicit activity, and we will impose costs on illicit Russian actors using digital assets to enhance and transfer their wealth, consistent with our national processes," the joint statement said.

Ari Redbord, head of legal and government affairs at TRM Labs, told CoinDesk earlier this week that crypto may not serve well as a sanctions-evasion tool for a number of reasons, including liquidity concerns.

"It's hard" to move billions of dollars worth of crypto, Redbord noted. It's possible some oligarchs might turn to crypto, but that may not be their first choice. Redbord, who was with the U.S. Treasury Department prior to joining TRM, said crypto could be part of the sanctions-evasion playbook, but oligarchs already have a complex set of tools they might turn to first to preserve their wealth, including the use of shell companies and purchasing high-end art.

A senior administration official similarly said they did not see crypto as being a "viable workaround" for the Russian central bank or its economy during a press briefing previewing a sweeping executive order on digital assets.

Friday's news comes days after U.S. Sen. Elizabeth Warren (D-Mass.) announced she was drafting a bill to prevent Russian oligarchs or President Vladimir Putin from using crypto to evade sanctions. Warren has been at the forefront of calls to tamp down this potential illicit activity

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