In response to growing concerns, including from U.S. sanctions officials that Vladimir Putin and his oligarch allies might look to cryptocurrency to conceal their financial movements, two bills—one in the House, sponsored by Rep. Brad Sherman (D-Calif.), the other in the Senate, sponsored by Sen. Elizabeth Warren (D-Mass.)—would authorize the president to impose financial sanctions on any digital asset trading platform that provides services to a sanctioned Russian person or entity.
The pro-crypto lobby is unhappy, and has reportedly spent $460,000 to oppose the legislation. While the decision to side with Putin and his allies risks significant reputational damage for a burgeoning industry desperate for Washington’s legitimization, it should also serve as a wake-up call to congressional Republicans to stop giving crypto companies a pass.
“These bills don’t target Russian oligarchs, who aren’t using (& can’t use) crypto to evade sanctions,” declared the policy director for the Blockchain Association, a lobbying group representing more than 70 crypto platforms. The statement is not true. Crypto can be used for sanctions evasion, and sanctions have always been applied to platforms that knowingly enable or facilitate sanctionable transactions. Indeed, Russian crypto abuses are nothing new.
Russia has emerged as a haven for cybercriminals who live on the digital decentralized ledger known as the blockchain, and it’s already the third-largest cryptocurrency miner in the world. Russia is a hub for “ransomware-as-a-service” providers who operate on the dark web, often with the connivance or even support of Putin’s regime. Now, as traditional bank compliance programs shut down the oligarchs’ ability to move funds, cryptocurrency platforms are an attractive conduit for sanctions evasion.