Economic sanctions against Russia has put crypto front-and-center as governments and centralized crypto firms are tested in their use of the technology.
On a geopolitical basis crypto has taken center stage following the unprecedented sanctions against Russia in the wake of its invasion of Ukraine. Those sanctions have included the removal of major Russian banks from the SWIFT banking money transfer system, as well as coordinated efforts to lock down Russian central bank assets held abroad.
Crypto has come to the forefront as a potential workaround for Russian oligarchs, which is putting the asset class and the industry which supports it under a spotlight such as it’s never seen before. The question on everyone’s mind at this point is how will centralized crypto businesses, and governments fare as they are tested to see whether they will use this technology properly, or improperly.
This testing moment could rally set the stage for the future growth of cryptocurrencies according to Liat Shetret, director of regulatory affairs and compliance policy at Solidus Labs, a crypto compliance software company.
While crypto exchanges have said that they will only freeze accounts of those legally sanctioned, they have also been actively monitoring transactions using blockchain surveillance techniques. In doing so, they are trying to assess and create an evidence trail for potential illicit transactions.
With the U.S. Treasury Department warning crypto exchanges not to facilitate transactions for those entities on the official sanctions list this tracing is of crucial importance. That warning comes in the wake of new regulations banning U.S. persons from providing any support to certain Russian oligarchs and entities as part of an ongoing effort to sanction Russia over its invasion of Ukraine.
“All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in … deceptive or structured transactions or dealings to circumvent any United States sanctions, including through the use of digital currencies or assets or the use of physical assets.”
So far it appears that the crypto industry is behaving in an ethical and moral manner, while complying with all laws and regulations, both exiting and newly created. That’s certain to be a positive for the industry going forward, helping to garner trust and thus greater adoption in the coming weeks and months.
