Cryptocurrencies shouldn't be used by Russia to avoid sanctions, US lawmakers

Democrat Senator Elizabeth Warren and three other lawmakers warned officials from the Treasury Department on Wednesday that cryptocurrencies might undermine U.S. foreign policy objectives by circumventing sanctions imposed on Russia.

Senators Brown, Warner, and Reed wrote to Treasury Secretary Yellen to inquire whether OFAC, the department's office for foreign assets control, has safeguards for enforcing sanctions compliance within the crypto industry.

"Strong enforcement of sanctions compliance in the cryptocurrency industry is critical given that digital assets, which allow entities to bypass the traditional financial system, may increasingly be used as a tool for sanctions evasion," the letter said.

Senators voiced concern that individuals sanctioned by the government could hide their assets through crypto wallets and dark web marketplaces.

Biden administration officials believe that Russia won't be able to evade sanctions completely using cryptocurrency.

While the Democratic lawmakers noted that the agency has become more reliant on voluntary self-disclosure for tracking compliance with sanctions by the crypto industry, they were unclear whether OFAC had appropriate guidelines for doing so.

Senators requested that Treasury respond by March 23 to a series of questions on the issue, as well as how the agency ensures that crypto will not be used for malign purposes.