US monitoring networks that may help Russia evade bevy of sanctions: State Treasury Secy

As the Russian military aggression on Ukraine intensified, the US Treasury Department on Wednesday said that it would continue to monitor Russia's efforts against using cryptocurrencies in a bid to ease the impact of sweeping economic sanctions imposed on the Russian economy. Addressing an event at the University of Illinois in Chicago, US Treasury Department Secretary Janet Yellen confirmed that the federal authorities have "continued to look at how sanctions work." She also stated that the issue has been raised by Senate Democrats who flagged that digital currencies could be used to "undermine" the wide-ranging penalties.

"I often hear crypto currency mentioned and that is a channel to be watched," as many participants of digital currency networks are subject to anti-money laundering and sanction rules," US Treasury Secretary Janet Yellen said in a statement.

"We will continue to look at how the sanctions work and evaluate whether or not there are leakages and we have the possibility to address them," she added.

Yellen's remarks come against the warning of potential "loopholes" in the plethora of crippling restrictions imposed on Russian banks and trade by the US to pressurise Moscow to withdraw troops from Ukraine. According to Wall Street Journal, the Russian attack on Ukraine and subsequent sanctions on Moscow have skyrocketed the demand for Bitcoin and other cryptocurrencies in both countries. It is pertinent to mention that such virtual assets can be regulated between two parties without a regulated intermediary, and are often seen as an alternative payment, as per the US Treasury Department. This could "potentially reduce the efficacy of American sanctions," the department had said in October as per WSJ.

US Senate Democrats flag concern over use of cryptocurrency by Russia to evade sanctions

On March 3, US Senate Democrats raised worries over the potential use of cryptocurrencies by Russia to reduce the impact of crippling economic measures against Russia for invading Ukraine. A group of lawmakers wrote a letter to Treasury Secretary Yellen urging authorities to investigate if the US needed additional tools to ensure external actors are not influencing the multilateral sanctions using digital currencies. “Strong enforcement of sanctions compliance in the cryptocurrency industry is critical given that digital assets, which allow entities to bypass the traditional financial system, may increasingly be used as a tool for sanctions evasion,” a letter by Sens. Elizabeth Warren (Mass.), Mark Warner (Va.), Jack Reed (R.I.) and Sherrod Brown (Ohio) to Yellen said.

Russia-Ukraine war

For a recap, Kyiv and Moscow have remained at loggerheads since 2014, after Russia invaded and annexed the Crimean Peninsula. The standoff expanded after Moscow deployed over 1,50,000 troops along the east Ukrainian borders. On February 21, Russia escalated the crisis by formally recognising the independence of two breakaway regions of Ukraine and later on February 24 unleashed unprovoked military operations on Ukraine. Meanwhile, Western powers have continued to provide economic and military support to Ukraine against Russia's military invasion.

(Image: AP/Unsplash)