US and EU Take Measures to Prevent Russia from Avoiding Sanctions through Crypto

The cryptocurrency market has been under intense pressure to ensure that Russia does not use the sector to avoid the harsh sanctions imposed on the country by the US and its Western allies.

The United States government and the European Union have unveiled new measures that will target the economy of Russia and oligarchs. This comes amid a report showing that allies of Vladimir Putin have been using cryptocurrencies to avoid the Western sanctions.

The US and its allies tighten sanctions against Russia

Russia has been facing tight Western sanctions following the invasion of Ukraine. The White House has tightened sanctions against the country, and it is now banning the import of Russian goods and the export of luxury products to Russia. The US Treasury has also said that it will monitor if Russia avoids these sanctions.

“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,” the White House said.

The US has been working with the European Union and the G7 countries to pressure the president of the Russian Federation to withdraw his troops from Ukraine. The European Commission had said that its member states were amending regulations to ensure that Russia could not circumvent these sanctions and even mentioned using cryptocurrency assets.

The president of the European Commission had said that more financial restrictions against Russia would be announced on Saturday to ensure the country does not avoid the sanctions. However, many EU countries have not announced sanctions against Russian oil and gas. Earlier this week, the US announced a ban on Russian oil products.

Monitoring the crypto sector

Various regulatory bodies and federal agencies have warned crypto businesses from aiding the individuals and entities targeted by the sanctions. The US Justice Department has announced the formation of a task force that will freeze the cryptocurrency holdings of wealthy Russians and investigate financial institutions that are helpi9ng the sanctioned individuals.

The UK financial regulator, the Financial Conduct Authority (FCA), has urged crypto firms to “play their part in ensuring that sanctions are complied with.” The regulatory body noted that sanctions applied in all assets, including crypto. “The use of crypto assets to circumvent economic sanctions is a criminal offence,” the FCA added.

The economic sanctions imposed against Russia have been quick, affecting a wide range of industries. Some of the leading global brands such as McDonald's and payment platforms such as Visa and Mastercard have closed their operations in Russia following these sanctions.

A Reuters report stated that cryptocurrency firms in the United Arab Emirates had received inquiries about using cryptocurrencies to buy property. In the report, a real estate broker stated,

We've been seeing a lot of Russians and even Belarusians coming to Dubai and bringing whatever they can bring, even in crypto.

Some of the leading cryptocurrency exchanges have refused the requests of the Ukrainian government to freeze all the wallet addresses of Russian users. Coinbase and Kraken have said that a unilateral ban would not be imposed, but they would only freeze the accounts of those named in the sanctions.

Binance has also restricted the use of sanctioned banks on the platform. Those with accounts with sanctioned Russian banks cannot use them to deposit fiat on the exchange. As Visa and Mastercard halt their activities in Russia, Binance has also announced that it would no longer accept payments from these cards issued in Russia.