Senator Elizabeth Warren, a major opponent of crypto, was recently engaged in a heated exchange regarding the possible use of Bitcoin to evade sanctions. Soon after the heated exchange, in which she expresses fears of Russians using crypto to evade sanctions, the Senator has now revealed she is working on a bill to keep Russians from using crypto to evade sanctions.
Details of the Bill
According to a tweet from Senator Warren, the bill would prevent Putin and his cronies from using crypto to hide their wealth and evade sanctions. If passed, the bill would give the Treasury Department the power to ban crypto exchanges in the US from processing crypto transactions from Russian-affiliated crypto addresses. Additionally, it would empower the president to apply sanctions on foreign exchange that facilitate sanctioned Russians, companies, or government entities. Empowering the president to apply sanctions is to ensure foreign exchanges are forced to choose between doing business with the US and doing business with sanctioned Russians.
We can't allow Putin & his cronies to hide their wealth & evade economic sanctions using cryptocurrency. My new bill w/@SenJackReed, @MarkWarner, @SenatorTester & colleagues would close this potential avenue for evasion & ensure Russia is held accountable.https://t.co/EqHsWIKKLS
— Elizabeth Warren (@SenWarren) March 17, 2022
The bill would also shine more light on the crypto sector, which is largely unregulated. Those citizens transacting over $10,000 in crypto offshore would need to report their holdings to the Financial Crimes Enforcement Network.
The bill was co-authored by Senator Warren, Senator Mark Warner of Virginia, and Senator Jack Reed of Rhode Island. A companion of this bill will be introduced to the House by Representative Brad Sherman, of California. It is titled the Digital Asset Sanctions Compliance Enhancement Act of 2022.
Warren is Not a Fan of Crypto
Senator Warren is a major opponent of crypto. She believes it does not offer consumer protection, it destabilizes the financial world and adds to global warming via the large amount of energy needed to confirm transactions.
Various lawmakers have expressed concerns regarding the ability of Russians to use crypto to evade sanctions. In recent years, various hacking groups, with some suspected to be from Russia, have planted ransomware in people’s computers and demanded payment in crypto.
Could Russians Evade Sanctions Using Crypto?
One problem with using crypto to evade sanctions is that all transactions are public and checked often via the blockchain. There are even whale alert bots designed to keep track of large transactions. As a result, law enforcement officials would know about a major transaction within minutes of it occurring. If someone was trying to hide a few thousand dollars, then crypto might be of use. However, if they tried to hide billions of dollars using crypto that would almost be impossible. One reason for this is that there is just not enough liquidity in most crypto exchanges to facilitate such a transaction. Trying to cash out the billions worth of crypto would raise alarm and probably fail.
Summary
It is not yet clear if the bill will gain enough momentum to pass. The reason for this is that most industry players believe there are already enough tools available to keep Russians from evading sanctions. For instance, most of the major crypto exchanges which have liquidity in the millions, already comply with tough AML and KYC rules. As such, there is little possibility of someone buying millions of dollars in crypto without leaving some identifying information.
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