- There are bipartisan concerns on the role of crypto in enabling Russia to skirt economic sanctions
- Warren's proposed bill would require crypto exchanges to track and submit records on transactions to private crypto wallets
As the sanctions against Russia become stringent and more companies including Visa and MasterCard join the list of those suspending operations in the country, the United States political class wants to go a step further to ensure that "crypto isn't used by Putin and his cronies to undermine our economic sanctions," as Democratic senator Elizabeth Warren put it.
According to a report first published by NBC News on Tuesday, the senior senator from Massachusetts is crafting a piece of legislation to crack down on crypto and prevent its use by Russia to evade the sanctions. The proposed bill intends to force exchanges to choose sides by threatening secondary sanctions.
"It aims to force companies to choose between doing business in the US or with sanctioned people and entities by threatening secondary sanctions on foreign crypto exchanges," the NBC News report read.
The bill, which Warren intends to present soon, will demand that crypto exchanges submit to the United States Department of the Treasury "detailed records" on customers' identifying information. It would also make it a mandatory requirement to track transactions to private crypto wallets and submit reports on the same.
There is evidence that crypto exchanges aren't compliant with sanctions
In a letter sent out to Treasury Secretary Janet Yellen last week, Elizabeth Warren led senators Jack Reed, Mark Warner, and Sherrod Brown to raise concerns that the crypto scene requires strict enforcement of sanctions as entities can leverage it to circumvent traditional financial systems.
The four Democratic senators worried that exchanges are not doing their bit in ensuring compliance with sanctions. Moreover, speaking to MSNBC yesterday, Warren noted that there's evidence to show that not all crypto platforms conform to KYC requirements and conduct efforts to enforce sanctions.
"We have a lot of evidence that not all the crypto platforms are actually adhering to those rules, and collecting the information and then reporting the information and then shutting down where we have sanctions," she told MSNBC's Andrea Mitchell.
The efforts to create new regulation around sanctions come even as the Financial Crimes Enforcement Network on Monday asked organisations with visibility to crypto and convertible virtual currencies (CVC) to report on potentially suspicious activity regarding skirting sanctions. FinCEN acknowledged that it was not " necessarily practicable" that CVCs are used to evade such wide-reaching sanctions.