the Central Bank of Ireland (CBI) has issued a new warning about the risks of cryptocurrencies like Bitcoin amid signs of this Russians may attempt to evade financial sanctions by using the digital assets.
The CBI reiterated its message that crypto assets are “highly risky and speculative” and the subject of misleading advertising and influencer campaigns on social media.
The statement was part of an EU-wide awareness campaign about the dangers of investing money in crypto for non-professional retail investors.
CBI Director-General for Financial Conduct Derville Rowland said European authorities were reacting to increasing “aggressive promotion” of cryptosystems.
“While people are drawn to these investments by the high returns advertised, the reality is that they carry significant risk,” she said.
“People should also be aware that if something goes wrong, you don’t have the protection that you would have if you invested in a regulated product.”
In February, the CBI warned that “bad actors” are using social media to manipulate markets and will crack down on investment recommendations from unauthorized parties outside normal financial channels.
The regulator said it would take action against regulated companies that have been executing trades for stock investment apps if regulators spot suspicious trends and coordinated market activity.
Meanwhile, European Central Bank President Christine Lagarde said there are signs some Russians are trying to circumvent sanctions over the war in Ukraine by swapping rubles for cryptocurrencies and stablecoins.
“If you look at the volumes of rubles in stables, in cryptos, right now it’s the highest level we’ve seen since maybe 2021,” Ms. Lagarde said at a virtual event yesterday j.
Crypto assets “are certainly being used as we speak to try and circumvent the sanctions that have been enacted against Russia by many countries around the world,” she said.
The measures announced by the US and the European Union are aimed at restricting Russia’s ability to conduct business in dollars and other international currencies. These include penalties for big banks and restrictions on the country’s elite.
That has led to speculation that crypto – touted as an alternative to traditional financial systems – could serve as a tool for wealthy Russians to circumvent these sanctions.
According to Jonathan Levin, co-founder of blockchain firm Chainalysis, until last week there was no evidence of Russia or President Vladimir Putin using cryptocurrencies to bypass curbs.
He and several industry experts told the US Senate Banking Committee that the crypto market is too small to allow for large-scale evasion of sanctions by Russians.
Still, ECB Executive Board member Fabio Panetta warned that crypto could represent a “major loophole” at the heart of the financial system and its misuse meant the “strictest standards” would have to be met – including in relation to know-your-customer, anti-money laundering and disclosure requirements”.
Additional reporting Bloomberg
https://www.independent.ie/business/irish/central-bank-issues-crypto-warning-amid-fears-of-sanctions-evasion-by-russia-41476329.html Central bank issues crypto warning amid fears of sanctions evasion by Russia