Senator Elizabeth Warren has proposed a new bill that enhances the U.S. government’s ability to clamp down on Russian cryptocurrency use.
The bill also has a provision that requires U.S. taxpayers to report certain types of crypto transactions.
As Russia’s invasion of Ukraine continues, U.S. Senator Elizabeth Warren has proposed a new bill that would enhance and expand enforcement of sanctions against the country, its entities, and individuals, specifically when it comes to use of cryptocurrency.
The Digital Asset Sanctions Compliance Enhancement Act of 2022 was introduced by the Massachusetts senator today during a Senate Banking Committee hearing. The bill sharpens the ability for President Joe Biden and the U.S. government to act against exchanges that transact with Russian addresses, among other provisions.
The proposed bill would give U.S. Treasury Secretary Janet Yellen “clear authority” to block U.S.-based cryptocurrency exchanges and payments operators from facilitating transactions with wallets that are known or reasonably believed to be based out of Russia.
Additionally, the bill gives Biden the ability to issue secondary sanctions against Russian actors that help people and entities in the country evade sanctions via cryptocurrency.
The bill also has a provision that could hit closer to home for some U.S. crypto users, however. It would require any U.S. taxpayer to report crypto transactions valued at $10,000 or more with any offshore entity to FinCEN, the U.S. Treasury’s Financial Crimes Enforcement Network, effectively identifying these private cryptocurrency wallets.
“Putin and his cronies can move, store, and hide their wealth using cryptocurrencies, potentially allowing them to evade the historic economic sanctions the U.S. and its partners across the world have levied in response to Russia’s war against Ukraine,” said Warren in a statement released today.
Warren introduced the bill alongside Senate Armed Services Committee Chairman Jack Reed, Senate Intelligence Committee Chairman Mark Warner, and Senate Defense Appropriations Subcommittee Chair Jon Tester. It’s also co-sponsored by seven fellow U.S. Senators, all Democrats.
The ability for cryptocurrency to be used by Russia and President Vladimir Putin to evade financial sanctions has been a key talking point since the invasion of Ukraine began on February 24. However, there’s significant debate over whether Russia could secretly transact large volumes of cryptocurrency in secret.
While there are so-called Bitcoin mixing services that can help obscure transactions, as well as privacy-centric coins like Monero and Zcash, most cryptocurrency transactions are publicly visible on the blockchain. Firms like Chainalysis and Elliptic specialize in untangling such data and making connections between wallets to identify potential bad actors in the space.
“Digital assets are uniquely ill-suited for sanctions evasion because of all the ways that digital assets can enhance sanctions compliance when compared to traditional financial markets,” wrote DeFi Education Fund policy director Miller Whitehouse-Levine in a recent Decrypt op-ed.
At today’s hearing, Chainalysis co-founder Jonathan Levin told senators that the firm has “not seen evidence of Russia or Putin systematically using cryptocurrencies to evade sanctions,” per a report from Bloomberg.
Washington, D.C.-based think tank Coin Center chastised Warren’s bill today, arguing that the legislation’s vague language “would place sweeping restrictions on the cryptocurrency ecosystem under the guise of bolstering sanctions against Russia for its unjustified invasion of Ukraine.”
In a blog post co-written by Jerry Brito and Peter Van Valkenburgh, the crypto lobbyist group further claimed that the proposed bill would indiscriminately punish software developers, network operators, and cryptocurrency miners. “This is unnecessary, overbroad, and unconstitutional,” the group said.
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