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EU looks at preventing use of crypto to avoid Russia sanctions

The EU is considering new measures to ensure digital assets are not used to evade sanctions against Russia, as the bloc tightens enforcement of monetary fines imposed on Moscow in the past week.

EU finance ministers and other senior officials on Wednesday discussed the risk that cryptocurrencies could be Used to bypass Sanctions, officials said.

Among those who pushed for a video conference call to action was Christine Lagarde, president of the European Central Bank. Bruno Le Meir, the French finance minister, said after the meeting that measures were being considered to “further increase the effectiveness” of the sanctions and to avoid any circumvention of the measures – including using cryptocurrencies. The committee is now expected to examine proposals to address the issue.

The debate in Europe comes when U.S. and UK lawmakers have also raised concerns that crypto deals could become a backdoor for money transfers to and from Russia, undermining Western efforts to isolate the country from the global financial system.

Many large crypto exchanges, including those based offshore, have pledged to respect existing sanctions but Opposed calls for a sweeping ban On dealing with Russia. A number of stock exchanges have said that broad restrictions would hurt ordinary Russians and run counter to the constitutive libertarian ideology of cryptocurrencies.

“If people want to avoid sanctions, there are always a number of methods,” Binang CEO Changfeng Zhao told the BBC on Wednesday. “You can do it using cash, using diamonds, using gold. I do not think crypto is anything special. “

During the conversation, Lagard argued in favor of legislation so that companies engaged in the issuance of crypto assets or the provision of related services to them would not deal with customers in Russia, according to people familiar with the meeting. The goal, she said, was to avoid using digital assets to circumvent sanctions and this week’s decision to cut off seven Russian banks from Swift.

In an earlier interview with FT, Paulo Gentiloni, the EU’s chief economist, said authorities had noted an increase in the use of cryptocurrencies in recent days, which he said “could be a way to circumvent the steps taken to freeze assets in Russia.”

In the U.S., a group of Democrats on the Senate’s influential banking committee wrote a letter to Janet Yellen, the secretary of the Treasury, expressing concern that a cryptocurrency could be used to evade sanctions.

“Strong enforcement of compliance with sanctions in the cryptocurrency industry is critical given that digital assets, which allow entities to circumvent the traditional financial system, may increasingly be used as a tool to evade sanctions,” Senators including Sherrod Brown of Ohio, panel chairman Mark Marguer, wrote. Jania and Elizabeth Warren of Massachusetts.

Lawmakers have said they are concerned that the Department of Foreign Asset Control, the arm of the Treasury Department that oversees U.S. sanctions policy, “has not developed strong and effective enough procedures for enforcement in the cryptocurrency industry.”

The U.S. Treasury Department declined to comment on the letter, but a U.S. official said it would be difficult for Russia and its wealthy people to use cryptocurrencies significantly to evade sanctions.

“It is impossible to run a G20 economy on crypto. Large banks in the economy need real liquidity and making large transactions in virtual currency is expected to be slow and expensive,” the official said.

UK lawmakers have also responded to the risk of using crypto to evade or undermine sanctions. “We are considering how Britain along with its allies can prevent crypto assets from appearing as loopholes to evade sanctions,” Baroness Penn, a government whip, said at the House of Lords on Wednesday.

British MP Tom Tugandhatt, chairman of the Foreign Affairs Committee, and fellow Lord Surfers wrote to the Financial Conduct Authority this week, demanding that the regulator issue new guidelines to crypto companies regarding the sanctions regime. ” Cryptographic, “they said.

The FCA said it has “contacted every crypto company registered with us to ensure they are aware of their sanctions and responsibilities” and is working with partners to actively monitor these companies. “We have made it clear to crypto companies, banks and others that we expect them to focus on their sanctions controls, and with our partners, we will oversee their operations.”

Another report by Eleni Verbitiotti and Martin Arnold and Laura Nonen in London

EU looks at preventing use of crypto to avoid Russia sanctions Source link EU looks at preventing use of crypto to avoid Russia sanctions

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