Following concerns that crypto assets could be used to avoid Western sanctions on Russia, global financial regulators are closely monitoring their use amid the conflict in Ukraine.
The $1.8 trillion cryptocurrency market is on the defensive, with politicians in the United States and Europe saying that digital asset companies aren’t up to the task of complying with Western banking sanctions placed on Russia after the country’s invasion of Ukraine.
Some cryptocurrency exchanges have rejected efforts to block all Russian users, raising concerns that cryptocurrency may be used to evade sanctions. Ukraine has also raised more than $100 million in cryptocurrencies after appealing for donations in bitcoin and other digital tokens on social media for military and humanitarian purposes.
Patrick Armstrong, a member of the Financial Stability Board’s (FSB) secretariat, said at a City & Financial conference in London, “We at the FSB are following the scenario, the conflict situation relevant to cryptos.”
According to Armstrong, the Financial Stability Board, which brings together financial regulators, central banks, and finance ministry officials from the Group of 20 economies, is sharing the information it gathers among its members. In an effort to eliminate any sanctions loopholes, the European Union released recommendations on March 9 to ensure that sanctions on loans and credit to Russia cover crypto assets.
Britain’s financial services minister, John Glen, said at the same conference that the UK’s efforts to bring crypto assets under anti-money laundering and counter-terrorist financing regulations will help law enforcement in crypto assets.
“We believe that these actions will help the administration respond effectively to Russia’s invasion of Ukraine,” Glen added.
However, according to David Raw, a policy manager at the Financial Conduct Authority in the United Kingdom, 90 percent of crypto firms seeking permission for anti-money laundering controls have either withdrawn or been denied because they did not fulfill the standards.
All enterprises engaged in crypto-related activity in the UK must get licenses by the end of March, and Raw sought to reassure those currently waiting for approval.
“It won’t be the case that you have to stop trading all of a sudden,” Raw said.
Britain is also cracking down on crypto marketing, with Glen stating that the UK government is currently debating whether more regulations for blockchain, the technology that underpins crypto assets, are required.
“In terms of crypto, we’re not done,” Raw remarked.
