US Treasury stresses that Russia sanctions extend to cryptocurrency

WASHINGTON: The US Treasury Department’s Office of Foreign Assets Control (OFAC) issued new guidance on Friday clarifying that US citizens and digital asset firms are required to comply with sanctions against Russia, even when facilitating transactions in cryptocurrency.

OFAC said in the guidance that people in the United States as well as businesses that deal in cryptocurrency, “must be vigilant against attempts to circumvent OFAC regulations” and should “take risk-based steps to ensure they do not engage in prohibited transactions.”

The warning comes as many in the crypto industry are responding to concerns from some lawmakers that digital assets could be used to circumvent Western sanctions imposed on Russia following its invasion of Ukraine.

Biden administration officials have said that they do not believe Russia would be able to use cryptocurrency to completely evade sanctions, but are still warning companies to be on the lookout.

In guidance issued on Monday, the Financial Crimes Enforcement Network (FinCEN) said crypto exchanges must report any suspicious activity, but Friday’s notice goes further by stating plainly that exchanges are prohibited from engaging in or facilitating illegal transactions.

The major crypto exchanges, including Coinbase and Binance, have not heeded calls to block Russian users, as some Ukrainian officials have called for.

Alex Bornyakov, Ukraine’s deputy minister of digital transformation, told Reuters that crypto exchanges that choose to remain in Russia will face public backlash unless they reverse course.