By Alicia Maher
According to Grewal, established financial institutions are still the most popular means of laundering fiat cash to avoid sanctions. Coinbase, a US-based cryptocurrency exchange, advises utilizing cryptocurrencies to check sanctions compliance. The advice also emphasizes the ease with which fiat monies may be laundered and sanctions evaded thanks to existing banking institutions.
As a result of the Russia-Ukraine conflict, Coinbase’s Chief Legal Officer Paul Grewal has written a blog post where he addresses the increasing number of sanctions placed throughout the globe. The cryptocurrency exchange backed the government’s decision to impose sanctions on individuals and areas, citing the measure’s importance in “improving national security and avoiding illegal aggression” as a reason for its support.”
“Financial policies are essential in enhancing national security and discouraging illegal action, and @coinbase strongly supports the work of government authorities in this regard. In terms of when, where, and how to use them, they are in the best position to make such decisions.”
https://t.co/h08YXYgAoM Sanctions play a vital role in promoting national security and deterring unlawful aggression, and @coinbase fully supports these efforts by government authorities. They are best placed to decide when, where, and how to apply them.
— Paul Grewal (@iampaulgrewal) March 7, 2022
Although countries have imposed sanctions, Grewal argues that the most popular technique of sanction evasion is still the laundering of fiat cash through established financial institutions. Contrary to popular belief, Grewal asserted that the digital asset transactions’ public, traceable nature makes it easier for governments to detect and punish tax avoidance.
“The rule applies to all US companies, regardless of whether they deal in dollars, crypto assets, gold, real estate, or nonfinancial assets. All US citizens and corporations are subject to sanctions legislation.”
2/ Every US company has to follow the law – it doesn't matter if your company handles dollars, crypto, gold, real estate or even non financial assets. Sanctions laws apply to all US people and businesses.
— Brian Armstrong – barmstrong.eth (@brian_armstrong) March 4, 2022
Jake Chervinsky, a well-known crypto lawyer, also explained why governments could not utilize cryptocurrency to avoid penalties. “Virtually unobtainable sums of digital assets” would be required by anyone attempting to thwart penalties, Grewal acknowledged.
Blocking access to blocklisted companies during the registration process, identifying evasion efforts, and predicting risks using a sophisticated blockchain analytics tool are some of the proactive actions taken by Coinbase to develop a worldwide sanction system.
As a result of the US government’s suggested penalties, several crypto firms have begun adopting measures to prevent cryptocurrency use further. It’s worth noting that a cryptocurrency wallet supplier headquartered in Prague has indicated that it would no longer send crypto wallets to Russia. Bitcoin (BTC), according to Satoshi Labs spokesperson Kristyna Mazánkov, is politically neutral. Still, the business’s decision to prohibit the supply of crypto wallets into Russia was taken because “company workers have links to the war that make it intimate.”
It is important to note that cryptocurrencies play a significant role in maintaining the privacy of individuals, a principle that exists inside the existing financial system.
DFS Announcement
A blockchain-based system was revealed by the New York State Department of Financial Services (DFS) in the first week of March. According to Cointelegraph, the DFS plans to accelerate the acquisition of new blockchain analytics technologies to aid in identifying Russian individuals and firms associated with DFS-licensed virtual currency operations.
According to Grewal, “we believe we can achieve a balance between both objectives by continuing to assist law enforcement actions while also developing policy frameworks that protect the privacy of the individual.”