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1 1 (May 4, 2022)

handle is hein.crs/govefrl0001 and id is 1 raw text is: Congressional *. Research Service Russian Sanctions and Cryptocurrency May 4, 2022 The United States has imposed sanctions against certain Russian entities and individuals in response to Russia's invasion of Ukraine-including on virtual currency transactions and cryptocurrency mining. Some Members of Congress and other observers have expressed concern that sanctioned parties may evade sanctions using cryptocurrency to transfer funds out of Russia, convert rubles to other fiat currencies, or receive payments and make purchases. Bills have been introduced in the 117th Congress to prevent such evasion. This Insight focuses on various evasion techniques and potential gaps in existing regulatory oversight. Potential Sanctions Evasion with Cryptocurrency Cryptocurrency transactions may enable sanctions avoidance, though there is limited public information on the use of these methods. Cryptocurrencies are created and exchanged through blockchain networks, which store tamper-resistant records of transactions. Most cryptocurrency transactions between parties are recorded directly on public blockchains-meaning anyone can view the records. Users are identified by public key addresses rather than their real-world identities, which led to concerns that Russian actors may use the pseudonymity of cryptocurrency to evade sanctions. Cryptocurrency supporters argue that sanctions evasion is impossible because transactions are publicly viewable on blockchains, which law enforcement may trace using analytics software and users' public key addresses. Additionally, cryptocurrencies are not a widely accepted form of payment, so most users convert to fiat currency (currency established by sovereign governments) through cryptocurrency exchanges to make purchases. In the United States, many exchanges are required to maintain customer identification programs and follow sanctions, which may limit evaders' ability to use exchanges that comply with U.S. regulations. However, sanctions evaders may attempt to obscure their blockchain transactions and evade measures imposed by exchanges through the following practices: Chain-hopping is the process of converting one cryptocurrency into another to hide illicit funds. In 2020, North Korean actors attempted to use chain-hopping to launder stolen cryptocurrency and evade sanctions. Congressional Research Service https://crsreports. congress.gov IN11920 CRS INSIGHT Prepared for Members and Committees of Congress

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