A group of Democratic senators introduced a bill today to ensure Russian actors do not evade economic sanctions imposed on the country following its invasion of Ukraine through the use of digital assets like cryptocurrency.
Sen. Elizabeth Warren, D-Mass., Senate Armed Services Committee Chairman Jack Reed, D-R.I., Senate Intelligence Committee Chairman Mark Warner, D-Va., and Senate Defense Appropriations Subcommittee Chair Jon Tester, D-Mont., introduced the Digital Asset Sanctions Compliance Enhancement Act to hold Russian President Vladimir Putin and Russian elites accountable.
The bill would authorize President Biden “to sanction foreign crypto firms that are doing business with sanctioned Russian entities,” Sen. Warren said today during a Senate Committee on Banking, Housing, and Urban Affairs hearing.
This legislation comes amid concerns from Federal agencies that Russian actors could try to evade economic sanctions by using digital currencies. However, the Biden administration said there is currently no evidence of cryptocurrencies being used by Russia to evade sanctions.
“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,” Sen. Warren said in a press release.
“I’m glad to introduce the Digital Asset Sanctions Compliance Enhancement Act with my colleagues to strengthen our sanctions program and close off any avenues for Russian evasion,” she said.
In addition to authorizing President Biden to act on foreign crypto actors, the legislation also authorizes the Treasury Secretary authority to prohibit digital asset trading platforms and transaction facilitators under U.S. jurisdiction from doing business with cryptocurrency addresses “that are known to be, or could reasonably be known to be, in Russia.”
Sen. Pat Toomey, R-Pa., raised concern over the legislation during today’s hearing, saying, “I know the intent is to go after oligarchs, but it looks to me like it would have a hugely negative impact on anybody in Russia engaged in any kind of crypto transactions.”
Michael Chobanian, the founder of KUNA Exchange and the president of the Blockchain Association of Ukraine, agreed with Sen. Toomey and reminded lawmakers to ensure they “don’t block the regular people in Russia who are actually opposition within Russia.”
“We only have to go after the sanctioned list and sanctioned people,” Chobanian said. “We have to make sure that we don’t block these people and we still allow for the opposition to survive both within Russia and outside because, as you know, they can’t use Visa, MasterCard cards outside of Russia right now. So, the only means of payments they have is cash or crypto. That’s it… so we have to make sure that we don’t cut off these people from actually surviving.”
In an effort to increase transparency around crypto holdings, the bill would also require U.S. taxpayers engaged in a transaction with a value greater than $10K of cryptocurrency offshore to file FinCEN Form 114 (FBAR).
The legislation would also require the Treasury Department to report on its progress in implementing provisions and issue a public report on foreign digital asset trading platforms that pose a “high risk” for illicit activities.
“In order for the sanctions levied by the United States and our allies to have the maximum impact on Vladimir Putin and his oligarch friends, we must close off avenues they might use to evade those sanctions,” Sen. Warner said. “This legislation will crack down on foreign actors who help sanctioned Russians use digital assets like cryptocurrencies to circumvent the crippling measures we’ve put in place to punish Russia for its barbaric invasion of Ukraine.”
The bill is co-sponsored by Sens. Tammy Duckworth, D-Ill., Debbie Stabenow, D-Mich., Raphael Warnock, D-Ga., Chris Van Hollen, D-Md., Tina Smith, D-Minn., Catherine Cortez Masto, D-Nev., and Bob Menendez, D-N.J.