US Senators Doubt Treasury Can Ensure Russia Does Not Evade Sanctions

US lawmakers are pressing the Treasury Secretary to stop Russia from using the digital assets to avoid Western sanctions.
Influential senators Warren and Brown fear the tokens could be used to thwart NATO efforts to force Putin out of Ukraine.

Democratic senators Elizabeth Warren, Mark Warner, Sherrod Brown and Jack Reed called on the Treasury Department to adopt necessary mechanisms to ensure that cryptocurrencies are not used by the Russian government to evade sanctions imposed by the West after the invasion of Ukraine.

In a letter to Treasury Secretary Janet Yellen, lawmakers raised concerns about whether the department’s Office of Foreign Assets Control (OFAC) was actually enforcing effective measures to enforce sanctions and the crypto industry does not contribute to avoiding them.

"Strict enforcement of sanctions compliance in the cryptocurrency industry is critical as digital assets, which allow entities to circumvent the traditional financial system, can increasingly be used as a tool for sanctions evasion", notes the letter cited by Reuters.

To force the government of Vladimir Putin to a ceasefire and the withdrawal of Russian troops from Ukraine, the United States and the European Union are applying a series of economic sanctions. In addition to supporting the Ukrainian resistance with weapons and money.

The Biden Administration Does Not Believe Russia Can Use Crypto

Among the sanctions stand out the blocking of the SWIFT (Society for World Interbank Financial Telecommunication) system for banks, the confiscation of government deposits in bank accounts in the West and the assets and money of Russian oligarchs.

Senators fear that digital wallets and so-called dark web marketplaces will allow officials and Putin-allied Russian elites to hide their assets and evade banking controls.

However, US officials are convinced that Russia will not be able to use crypto to completely avoid the effect of the sanctions. Although it is well known that the Russian government had been preparing for this moment for years. Russia has accumulated reserves of more than 630 billion dollars and cryptocurrencies and created its own money transfer system SPFS.

"The scale that the Russian state would need to successfully circumvent all financial sanctions from the US and its partners would almost certainly make cryptocurrencies an ineffective primary tool for the state," the director of cybersecurity at the Russian Federation said this week. National Security Council, Carol House.

On the Flipside

Democratic lawmakers allied with the Biden administration doubt that OFAC is capable of effectively monitoring strict compliance with sanctions by cryptocurrency platforms.
They said the agency has become “increasingly reliant on voluntary self-disclosure.”
Through their letter, the legislators have asked the Treasury to respond to their concerns on the subject before March 23.
Since the beginning of the Russian occupation, Ukraine has been asking for cryptocurrency support to finance its war spending.