The United Kingdom regulators stated that “using crypto assets to evade sanctions is a criminal offense.”
Crypto assets usage to evade sanctions in foreign nations by Vladimir Putin’s associates has suffered another blow following the US and the EU announcement which is aimed at Russia’s economy and wealthy individuals.
In reaction to President Vladimir Putin’s military invasion of Ukraine, the White House announced on Friday that the US, Canada, France, Germany, Italy, Japan, the United Kingdom, and the European Union will take new steps to economically isolate Russia. The declaration includes prohibitions on the import of various Russian goods, prohibitions on the export of luxury goods to Russia, and instructions to the US Treasury Department on how to track the country’s attempts to circumvent existing sanctions.
“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,” said the White House. “Treasury is closely monitoring any efforts to circumvent or violate Russia-related sanctions, including through the use of crypto assets, and is committed to using its broad enforcement authorities to act against violations and to promote compliance.”
The US approach is part of a coordinated effort with the European Union and G7 countries to “increase collective pressure on Putin” and impose extra financial sanctions on Russia. The European Commission announced on Wednesday that its member states had decided to alter legislation to ensure that “Russian sanctions cannot be bypassed, including through Belarus,” explicitly addressing the usage of crypto assets.
President of the European Commission, Ursula von der Leyen, stated that the sanctions on Russia will begin on Saturday. Even though several EU nations have not stated whether they will put limitations on Russian-produced oil and gas compared to those imposed by US President Joe Biden earlier this week, Von der Leyen warned there would be a “major prohibition” on European investments in Russia’s energy industry.
Individuals and businesses trading in the cryptocurrency have been warned of possible enforcement actions by regulatory bodies and government departments in several nations adopting such economic sanctions against Russia. According to Bloomberg, the US Justice Department is organizing a new task force to freeze or seize the crypto holdings of wealthy Russian individuals, as well as investigate banks and crypto businesses that assist entities identified under sanctions for money laundering. The Financial Conduct Authority and the Office of Financial Sanctions Implementation in the United Kingdom published a joint statement warning crypto companies to “play their part in ensuring that sanctions are complied with.”
The UK regulators stated, “Financial sanctions legislation do not differentiate between crypto-assets and other forms of assets.” “It is a criminal violation to employ crypto assets to evade economic sanctions.”
The economic sanctions against Russia were quick, and they impacted a wide range of industries. In the previous seven days, private companies such as McDonald’s, Goldman Sachs, Visa, and Mastercard have all severed connections with the government.
Though some US officials have indicated that crypto will be tough for Russian individuals and firms to use to avoid such broad and unexpected penalties, Reuters reported on Friday that they may be looking to the United Arab Emirates for help. According to the news portal, crypto businesses in the country have received several requests about using crypto assets to buy real estate or dispose of big quantities of crypto assets.
“We’ve seen a lot of Russians and even Belarusians coming to Dubai and carrying whatever they can, including cryptocurrency,” claimed an unnamed real estate broker whose firm worked with a crypto firm.
Some cryptocurrency exchanges have rebuffed efforts from Ukraine to blacklist all Russian addresses. Coinbase and Kraken, both based in the United States, said they would freeze the crypto assets of those mentioned in the sanctions. Users with accounts at sanctioned Russian banks will not be able to use Binance, and the platform will not accept payments from Mastercard and Visa cards issued in Russia.
Russia’s and Ukraine’s relationship is still evolving. While Ukraine has been under Russian missile attacks since February 24, Ukraine’s minister of digital transformation, Mykhailo Fedorov, continues to issue tweets urging financial services firms, especially those involved in crypto, and significant corporations to stop doing business with Russia:
