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1 1 (May 26, 2022)

handle is hein.crs/govefvi0001 and id is 1 raw text is: Congressional * Research Service Russia Sanctions and Cryptocurrencies: Policy Issues May 26, 2022 The G-7 (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States), the European Union (EU), and other countries have responded to Russia's expanded invasion of Ukraine in February 2022 with swift, coordinated, and broad sanctions designed to exert significant pressure on key Russian individuals and companies, as well as the broader Russian economy. As the multilateral coalition seeks to sustain economic pressure on Russia, and Russia seeks ways to mitigate the impact of sanctions, some in Congress are asking whether cryptocurrencies offer Russia a way to evade sanctions. This Insight discusses related policy issues and proposed legislation; for technical analysis of cryptocurrency as a potential means of sanctions evasion, see CRS Insight IN 11920, Russian Sanctions and Cryptocurrency, by Kristen E. Busch and Paul Tierno. Are Transactions in Cryptocurrencies Subject to Sanctions? The United States and G-7 partners have reiterated that sanctions apply to all transactions involving designated parties, regardless of the currency in which a transaction is denominated or the means used to complete a transaction. U.S. sanctions apply equally to transactions conducted in traditional fiat currencies (e.g., dollars, yen, euros, pounds, renminbi) and transactions conducted in cryptocurrencies or other digital currencies. Is Russia Evading Sanctions with Cryptocurrency? The pseudonymous nature of cryptocurrency may facilitate illicit finance by making payments more difficult to trace. However, the Treasury Department has found little evidence to date that Russian government officials or Russian individuals are using digital currencies to evade sanctions. Analysis by a private-sector blockchain analytics firm reached the same conclusion. More generally, the global cryptocurrency market is not liquid enough to backfill the financial needs of the entire Russian economy, the 1 1th largest in the world before the 2022 war. The collapse in the cryptocurrency market in May 2022 also highlights the volatility risk reliance on cryptocurrencies poses for would-be sanction evaders. Reasons for concern remain. The cryptocurrency market is likely liquid enough to allow some Russian individuals and companies to transfer large sums of money. Actors associated with robust sanctions Congressional Research Service https://crsreports.congress.gov IN11939 CRS INSIGHT Prepared for Members and Committees of Congress

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