By Alicia Maher
The EU and G7 have jointly released an official statement on new sanctions for Russia, but most of these new sanctions are crypto-focused. The new release will ensure that Russia doesn’t hide under the digital assets space to avoid the previous sanctions.
Updated Sanctions
Part of the announcement states that “these new sanctions will ensure that the state of Russia, its oligarchs, and elites remain restricted from the global financial system and can’t leverage on virtual assets to lessen or evade the effect of the previous sanctions.”
The G7 nations comprising Germany, US, Canada, UK, Japan, France, and Italy also stated that it “would take stronger punitive measures against any Russian (belonging to the class mentioned above) attempting to use cryptos to perform illegal activities. Thus, facilitating the transfer of wealth from them in line with our outlined processes.”
The announcement further reiterated that the current sanctions on Russia regarding the global financial system also cover cryptocurrencies. This past Wednesday, the EU also made similar clarifications regarding its sanctions on Russia and Belarus. A top-level official in the current US administration opined that it isn’t likely that Russia’s apex bank will use crypto as an alternative measure to evade sanctions.
Ensuring The Non-Violation Of Sanctions
Last Friday, the US treasury department claimed to have set up a process to monitor Russia-related sanctions and reveal any plan by the Russian state to violate its current sanctions via digital assets.
An updated version of the department’s FAQs showed that virtual asset service providers (VASPs) such as crypto exchanges and wallet providers and Americans generally are forbidden by law to engage in any crypto transactions with any Russian belonging to the group mentioned above.
Furthermore, US citizens have been banned from crypto transactions with non-us citizens, especially when they involve any Russian-related entity such as Russia’s finance ministry, national wealth fund, and central bank.
The EU and G7 nations provided an update to their previous sanctions after American Senator (Liz Warren) proposed a bill earlier this month to hinder Russia’s wealthy men from escaping sanctions through virtual currencies.
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
Nevertheless, President Joe Biden and his administrators are convinced that the recent crypto executive order will positively affect the crypto industry, which will also positively affect the economy and national security.
Tether Objects To Ukraine’s Twitter Appeal
Most VASPs and other crypto players have objected to Ukraine’s vice-president (Mykhailo Fedorov) ‘s Twitter appeal to block all Russian-owned crypto accounts. Tether is the latest to make a formal announcement of its objection. The USDT issuer stated that it has its pulse on the market. Before releasing this official announcement, Federov had made a special appeal to tether and its CTO Paolo Arduino regarding the blockage of Russian-related accounts on its platform.
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
Speaking with the media, Arduino said, “part of our responsibilities is to monitor the crypto market regarding any irregularity or circumvention of any international sanctions.” Tether’s announcement comes days after Coinbase, Kraken, Binance, and other top crypto exchanges released statements of non-adherence to Federov’s appeal. These top crypto exchanges stated that they have no plans to unilaterally freeze the accounts of any of their Russian users.
Binance CEO, CZ, further claimed that his exchange arm would only do so if the Russian sanctions say so, adding that it’s an unethical practice to do so without any legal backing. However, he said, the exchange is closed completely to anyone on the sanction list. All these crypto platforms claimed that implementing Federov’s appeal is antagonistic to the primary objective of BTC, which is “free accessibility to complete financial transactions without the involvement of any third-party, especially the government.”