U.S. U.S. Ten other Democratic senators are co-sponsoring the bill, including Jack Reed, Mark Warner, and Jon Tester.
In a joint press release, the senators stated that the bill’s purpose is to “ensure that Vladimir Putin’s and Russian elites don’t use digital assets in order to undermine international sanctions against Russia after its invasion of Ukraine.”
Senator Warren asserts that the bill will “strengthen sanctions program and close off all avenues for Russian fraud,”
Putin and his cronies are able to move, store and hide their wealth using cryptocurrency, potentially allowing them evade the economic sanctions that the U.S. and its allies around the world have imposed in response to Russia’s war against Ukraine.
Many people have noted that cryptocurrency won’t help Russia evade sanctions. This includes Christopher Wray, FBI Director, who stated last week that Russia’s ability to circumvent the sanctions using cryptocurrency was “highly underestimated.” Carol House, director of cybersecurity at the National Security Council, recently stated that crypto is an ineffective way to circumvent the sanctions.
The Digital Asset Sanctions Compliance Enhancement Act would allow the president to sanction foreign cryptocurrency firms that do business with sanctioned Russian entities. This would prohibit their transactions with U.S. persons, and block their assets. The Treasury secretary would have the authority to ban crypto platforms and transaction facilitators from transacting in the U.S. with Russian crypto users. The Treasury will have to identify foreign cryptocurrency trading platforms that pose a high risk of money laundering and sanctions evasion. Additionally, the bill would require U.S taxpayers to report offshore crypto transactions exceeding $10K.
Jerry Brito, the executive director of the D.C.-based thinktank Coin Center, stated that the bill would “impose sweeping restrictions upon the cryptocurrency ecosystem under guise of strengthening sanctions against Russia for their unjustified invasion in Ukraine.”
The bill would impose severe restrictions on individuals who create, operate and use cryptocurrency networks, even if they are unaware of or intend to help evade sanctions.
The bill’s text defines “digital asset transaction facilitator” as “any person or group that significantly and materially facilitates purchase, sale or borrowing, exchange, custody or validation of digital assets on behalf of others.” This includes any communication protocol, decentralized financial technology, smart contract or other software.
Brito stressed that Senator Warren’s bill would sanction “miners, node operator, smart contract developer, etc.”
[The bill] would allow technologists and users to be sanctioned for publishing open-source software or for facilitating communication between network participants. This is unconstitutional, unnecessary, and broad.