EU, US trying to ensure Russia can't use cryptocurrencies to avoid sanctions

The European Union is seeking to make sure that cryptocurrencies are not used to circumvent sanctions imposed by the bloc against Russia, French Finance Minister Bruno le Maire said.

The 27-nation bloc has imposed three packages of sanctions on Moscow over the war it is waging on the people of Ukraine, including freezing Russian central bank assets and disconnecting seven Russian banks from the SWIFT financial-messaging system.

"We are taking measures, in particular on crypto currencies or crypto assets which should not be used to circumvent the financial sanctions decided upon by the 27 EU countries," Le Maire told a news conference after talks of EU finance ministers.

He said the sanctions against Russia were very effective and have disorganised the Russian financial system and paralysed its central bank's ability to protect the country's currency, the rouble. 

It had been reported that trading volumes between the Tether cryptocurrency and the rouble had spiked earlier this week after the value of the Russian currency had dived following the sanctions.

Some crypto-exchanges have said they won't stop Russians accessing its services, while others - including Binance - have blocked the accounts of Russians targeted by sanctions.

Trading volumes between the Russian rouble and the Tether cryptocurrency spiked this week as the local currency tumbled to a record low on Western sanctions.

Crypto-exchange Binance has, however, blocked accounts of any Russian clients targeted by sanctions. 

Meanwhile US Senators have also asked the Treasury if sanctions against Russia can be enforced in cryptocurrency markets.

A group, including Elizabeth Warren, Sherrod Brown and Mark Warner, shared the concerns of the EU finance ministers and wrote to Treasury secretary Janet Yellen.

"We write to inquire about the Treasury Department’s progress in monitoring and enforcing sanctions compliance by the cryptocurrency industry and to express our concern that criminals, rogue states, and other actors may use digital assets and alternative payment platforms as a new means to hide cross-border transactions for nefarious purposes," the letter said.

"Given the need to ensure the efficacy and integrity of our sanctions program against Russia and other adversaries, we are seeking information on the steps Treasury is taking to enforce sanctions compliance by the cryptocurrency industry."

Reuters / Newshub