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US and EU Double Down on Measures Against Russia Likely Using Cryptocurrency to Evade Sanctions

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The United States and the European Union have announced new actions targeting the Russian economy and wealthy individuals as a report shows that Vladimir Putin’s allies have been trying to circumvent sanctions using cryptocurrency. death abroad.

In an announcement on Friday, the White House speak The leaders of the United States, Canada, France, Germany, Italy, Japan, the United Kingdom and the European Union will take additional actions to isolate Russia economically in response to a military invasion by President Donald Trump. President Vladimir Putin entered Ukraine. The announcement included a ban on imports of many Russian goods, a ban on luxury exports to Russia, and instructions for the US Treasury Department to monitor the country’s efforts to evade existing sanctions.

“The Treasury Department’s extensive actions against Russia require all Americans to comply with sanctions regulations regardless of whether transactions are conducted in traditional fiat or virtual currency,” the White House said. . “The Treasury is closely monitoring any attempts to circumvent or violate sanctions related to Russia, including the use of virtual currencies, and is committed to using its broad enforcement agencies to combat violations and promote compliance.”

The US policy is part of a concerted effort with the European Union and G7 nations to “increase joint pressure on Putin” and impose additional financial restrictions on Russia. On Wednesday, the European Commission said its member states agree to amend the regulations with the goal of ensuring “even more effectively that Russian sanctions cannot be bypassed, including through Belarus,” specifically referring to the possibility of using crypto assets.

European Commission President Ursula von der Leyen said officials would introduce measures against Russia starting Saturday. Although many EU members did not say they would impose restrictions on Russian-made oil and gas similar to those announced by US President Joe Biden earlier this week, Mr. said there would be a “major ban” on European investments in Russia’s energy sector. .

Regulators and government departments across many countries that have enacted economic measures against Russia have also warned individuals and businesses dealing in cryptocurrencies about possible enforcement actions. Bloomberg report on Friday that the US Department of Justice will create a new task force aimed at freezing or seizing crypto assets of wealthy individuals in Russia as well as investigating crypto banks and companies. help entities punished for money laundering. In the UK, the Financial Conduct Authority and the Financial Sanctions Enforcement Office grant a joint statement warned crypto companies “to play their part in ensuring that sanctions are complied with.”

The UK regulators said: “Financial sanctions regulations do not distinguish between crypto-assets and other forms of assets. “It is an offense to use crypto assets to circumvent economic sanctions.”

Related: Cryptocurrencies give Russia no escape from Western sanctions

Economic measures against Russia are swift and affect many industries. Private businesses from fast-food chain McDonald’s, major bank Goldman Sachs and credit card companies including Visa and Mastercard have all severed ties with the country over the past seven days.

Although some US officials have said that Russian individuals and businesses will having trouble using cryptocurrencies to avoid such abrupt and comprehensive sanctions, a report Friday from Reuters suggest they may be turning to the United Arab Emirates for a solution. The newspaper reports that crypto companies in the country have received many inquiries about using cryptocurrencies to buy assets or liquidate large amounts of digital assets.

“We have seen a lot of Russians and even Belarusians come to Dubai and bring whatever they have,” said an unnamed real estate broker whose company works with a cryptocurrency company. carry, including cryptocurrencies”.

Some cryptocurrency exchanges have refused request from Ukraine to block all addresses from Russian users. However, Coinbase and Kraken – both with headquarters in the US – said they would freeze the assets of individuals named in the sanctions. Cryptocurrency exchange Binance said that users with accounts from sanctioned Russian banks will not be able to use them, nor can the platform accept payments from Mastercard and Visa cards issued in Russia.

The situation between Russia and Ukraine is still evolving. While Ukraine has been hit by Russian missile attacks since February 24, Mykhailo Fedorov, the country’s minister of digital transformation, continues to issue tweets calling for service companies financial – including those related to cryptocurrencies – and large companies that stop doing business with Russia: