Concerns are being raised about Russians hoarding wealth in digital assets as the Kremlin continues its military assault against Ukraine. US Senator Elizabeth Warren highlighted that crypto cannot be used to hide wealth.
A new bill, the Digital Assets Sanctions Compliance Enhancement Act which was introduced by Warren, will block cryptocurrency companies from transacting with sanctioned entities. The senator explained that the bill would authorize the president to sanction foreign cryptocurrency firms that are engaged in business with sanctioned Russian entities.
Michael Mosier, the deputy director, and digital innovation officer of the Financial Crimes Enforcement Network (FinCEN), pointed out that one can’t flip a switch overnight and run a G20 economy on cryptocurrency. He said there is no liquidity. Michael Chobanian, the founder of KUNA Exchange who is also the president of Blockchain Association of Ukraine, says it’s impossible. Chobanian highlighted that its physically impossible to transfer large amounts of money from fiat into crypto.
Lawmakers have also raised concerns about Russia emerging as a crypto mining hub after China renewed its crypto ban in 2021. Senator Bob Menendez highlighted that crypto mining is an energy-intensive industry. It’s likely the Russian government will turn to mining in an effort to evade sanctions. Russia accommodates 13.6% of bitcoin mining globally, as per data from the Cambridge bitcoin electricity consumption index.
Shane Stansbury, an expert with the Center for Law, Ethics, and National Security, pointed out that Iran successfully mined cryptocurrency to its advantage. North Korea has also turned to crypto to fund its regime. But Chobanian argued that Russian miners are just normal individuals who mine to earn money and engage with technology.