The US, EU and G7 Nations Announce Fresh Crypto Sanctions on Russia

Key Insights:

• G7 countries, the US, and the EU imposed further sanctions on Russia, focused on crypto.
• The US Treasury will ‘closely monitor’ any efforts that violate Russian sanctions, including the use of crypto.
• Crypto exchanges have demurred Ukraine’s efforts to block Russian customers.

G7 nations, along with the US and the European Union, have released a statement implementing new crypto sanctions on Russia.

The joint statement explains cracking down on perceived usage of crypto to ensure that Russia cannot use cryptos to evade sanctions. It read,

“In addition to other measures planned to prevent evasion, we will ensure that the Russian state and elites, proxies, and oligarchs cannot leverage digital assets as a means of evading or offsetting the impact of international sanctions, which will further limit their access to the global financial system.”

The G7 leaders – the U.S., U.K., France, Canada, Japan, Italy, and Germany – stressed that it would take measures to detect any illicit activity better and impose costs on illicit Russian actors using digital assets adding,

“[This will] enhance and transfer their wealth, consistent with our national processes.”

The current sanctions already apply to digital currencies, the statement noted. Last week, the EU also clarified that its sanctions against Russia and Belarus would include cryptocurrency transactions.

A senior administration official from the White House said earlier this month that they did not see crypto as a ‘viable workaround‘ for the Russian central bank.

US Treasury ‘Closely Monitoring’ Crypto Efforts

The US Department of Treasury announced on Friday that it is ‘closely monitoring’ any efforts to circumvent or violate Russia-related sanctions, including the use of digital currency.

“[The Department] is committed to using its broad enforcement authorities to act against violations and to promote compliance.”

According to the Department’s FAQ guidelines, Americana, crypto exchanges, wallet hosts, and other service providers are prohibited from engaging in crypto transactions that involve blocked Russians.

Additionally, Americans are banned from engaging in transactions by a non-US citizen including virtual currency transactions involving the Central Bank of the Russian Federation, National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation.

The new guidelines come shortly after Elizabeth Warren, a US Senator, announced drafting a bill to prevent Russian oligarchs from using crypto to escape sanctions. 

I'll be speaking soon with @Mitchellreports on @MSNBC about my new bill to ensure crypto isn't used by Putin and his cronies to undermine our economic sanctions. Hope you'll tune in! https://t.co/H8iTnA5Ulw

— Elizabeth Warren (@SenWarren) March 8, 2022

Meanwhile, the Biden administration has been counting on the long-anticipated crypto Executive Order focusing on the impact of digital assets on national security and the economy.

Crypto Exchanges Reject Blocking Russian Customers

Many crypto exchanges have demurred requests from Ukraine’s Vice Prime Minister Mykhailo Fedorov to block all Russian accounts.

Tether, being the latest, has denied Fedorov’s appeal on Twitter, stating Tether is conducting “constant market monitoring” on these aspects.

Today, the entire democratic world has united against Russia to punish the bloody invaders economically. I call on @tether_to @paoloardoino to stop any transactions with the Russians! For peace!

— Mykhailo Fedorov (@FedorovMykhailo) March 11, 2022

Paolo Ardoino, Tether’s CTO, told CoinDesk that the company will ensure that there are no irregular movements or measures that might be in contravention of international sanctions.

His comments align with crypto exchanges, including Coinbase and Kraken, which declined an outright ban on all Russian accounts.

Binance, the world’s largest crypto exchange, also rejected the war-torn country’s appeal to boot Russian customers, saying it has no plans for a unilateral freeze.

Changpeng Zhao, CEO of Binance exchange, called it “unethical” to block all Russians and said the exchange strictly implements the sanction rules. He said,

“Anyone on the sanction list cannot use our exchange.”

These crypto exchanges argue that banning the entire nation could run counter to Bitcoin’s spirit of offering payments access free from government oversight.