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Sen. warren sanctions compliance crypto

sen. warren sanctions compliance crypto

Under Section 4 of the bill, the Secretary of the Treasury may also request that any U.S. based digital asset trading platform or digital asset transaction facilitator not conduct business with those “digital asset addresses that are known to be, or could reasonably be known to be, affiliated with persons headquartered or domiciled in the Russian Federation.”

“…not later than 90 days after exercising the authority necessary to the national interest of the United States, submits to the appropriate congressional committees and leadership a report on the basis for any determination under that paragraph.”

“The U.S. and its allies have imposed some of the strongest sanctions in history to try to stop Putin and his cronies from waging war on Ukraine.

Sen. Elizabeth Warren Introduces Bill Designed To Block Crypto To Uphold Sanctions

Welcome back to the Tribe! In this post we dive into the Elizabeth Warren Crypto Bill.

Nothing should be considered investment or financial advice. Enjoy the ride!

Elizabeth Warren Crypto Bill

Yesterday, during the Senate Banking Committee hearing on digital assets and crime, the US senator who has been a proponent of preventing sanction evasion using cryptocurrency, introduced a bill that she believes will effectively achieve her aims with the support of 10 other co-sponsors.

Bill and Provisions

Elizabeth Warren has been a strong proponent of preventing Russia from evading sanctions using cryptocurrencies.

A sanctions system without strong authorities to limit evasion using digital assets is like having a security system but leaving the front door open. This bill would clarify Treasury’s authorities and strengthen our sanctions on Putin and his enablers,” said Sen.
Reed in the press release.

However, according to CoinCenter, problems arise with this Section, as it “empowers the Treasury Secretary to arbitrarily ban software developers, miners, and node operators from having any ‘business’ interaction with anyone or any address that might be Russian.”

Looking at the proposed bill from an analytical standpoint, it’s possible that the proposed section is not only overreaching, but broad and vague, which is not in favor of the drafters.

FinCEN requiring U.S.

Sen. warren sanctions compliance cryptoapi

And while one might be tempted to think legislation that targets something nonexistent would be harmless, Senator Warren’s legislation would have no shortage of collateral damage,” the post reads.

Held liable by simply creating open-source software

Despite the bill’s intention to address the risk that people on the sanctions list will use cryptocurrencies to evade the law, the bill reaches far beyond the Russian oligarchs and banks.

According to Cato Institute, there are two drastically different groups of people being described in the proposed legislation. The first group is made up of those who “significantly and materially” assist with sanctions evasion.

Sen. warren sanctions compliance cryptoax

Russia or its oligarchs to evade sanctions, and that cryptocurrencies, such as bitcoin (BTC) and ether (ETH) would be a poor tool for evading sanctions.

According to Cato Institute’s post, President Biden’sexecutive orderon cryptocurrency mentioned the word “illicit” no less than 24 times, and last week’s Senatehearingwas titled “Understanding the Role of Digital Assets in Illicit Finance”.

Similarly, according to the Cato Institute, Senator Elizabeth Warren used that hearing to introduce a bill that might have been better had the expert witnesses been given the opportunity to weigh in on it before its introduction.

“Throughout the hearing, the experts repeatedly confirmed that there is no evidence to suggest cryptocurrencies are being used by Russia or its oligarchs to evade sanctions. In fact cryptocurrencies would be a poor tool for evading sanctions.

Sen. warren sanctions compliance crypton

Also speaking during the hearing, Levin, Michael Mosier, former acting director and current deputy director and digital innovation officer of the Financial Crimes Enforcement Network (FinCEN) agreed that it would be difficult for Russia to effectively evade sanctions using cryptocurrency.

He added that the levels of requisite liquidity to run serious amounts of Russian government capital via digital assets is a pipe dream.

“I’m the person who is behind all the numbers, I know how this happens, and it’s impossible, physically impossible, to transfer large amounts of money from fiat into crypto.”

Michael Chobanian, founder of KUNA Exchange and president of the Blockchain Association of Ukraine also said.

Similar News – Russia and Crypto

Russia’s central bank has issued a crypto license to local financial institution Sberbank.

FinCEN) would be authorized to actually identify users who are transacting with more than $10,000 in crypto, by filing FinCEN Form 114 (FBAR).

“Not later than 120 days after the date of enactment of this Act, the Financial Crimes Enforcement Network shall require United States persons engaged in a transaction with a value greater than $10,000 in digital assets through 1 or more accounts outside of the United States to file a report.”

From there, within 120 days after the Act is enacted, and every year following, the Secretary of the Treasury will also be required to submit a report to the appropriate congressional committee, which will be made publicly available, identifying the digital asset trading platforms that are deemed by the Office of Foreign Assets Control to be a high risk for sanctions evasions, money laundering, or other illicit activities.

Ultimately, Sen.

Elizabeth Warren (D-MA), along with ten other democrat senators, introduced a bill to block cryptocurrency companies from conducting business with sanctioned companies, fearing cryptocurrencies might constitute a vehicle for evading sanctions against Russia in the ongoing war with Ukraine.

In short, the Digital Asset Sanctions Compliance Enhancement Act of 2022, as thebillis named, would allow the U.S. president to add non-U.S.-based crypto companies to the sanctions list if they support sanctions evasion. As Sen. Warren is well known for her disdain of cryptocurrencies in general, this bill is accused of introducing sweeping rules that may affect software developers and network node operators, among others, that have no intention or even knowledge of blockchain transactions involving sanctions evasion.

Unexpected consequences and collateral damage


Requiring the U.S. President to identify foreign digital asset actors

The biggest takeaway of Sen. Warren’s newly introduced bill is that it would require U.S.

President Joe Biden to issue a report to Congress identifying any “foreign person that…(1) operates a digital asset trading platform or is a digital asset transaction facilitator” and (2) has significantly and materially assisted…any person” who is on a sanctions list or “facilitating transactions that evade such sanctions.”

In imposing those sanctions, the bill also states that the President “may” exercise all the powers granted to him under the International Emergency Economic Powers Act to the extent necessary to be able to block and prohibit all transactions in property and interests in property of a foreign person identified in the submitted report.

Granting Treasury Secretary authority to restrict U.S.

As Coin Center’s Jerry Brito and Peter van Valkenburghwarned, “The mere fact that a stranger is using your software or network throughput to do something illegal without your knowledge cannot be a trigger for the crushing penalties that are sanctions.”

Worse yet, as per the blog post, the bill would also give the Treasury secretary full discretion to prohibit U.S.-based exchanges, software developers, and miners from engaging with anyone in Russia––not just those on the sanctions list.

“So in the name of targeting a specific group of bad actors, the bill seeks to target even those that might unknowingly have been involved. And in targeting all of these people, it would call on the president and Treasury secretary to exercise unchecked powers.

Russia to evade sanctions, the language in the bill is still correct to note that active sanctions evasion is an illegal activity.

However, the second group being described is far broader as it captures anyone that “provided financial, material, technological support for, or goods or services to or in support of” anyone sanctioned. In practice, this means someone could be held liable for assisting sanctions evasion by simply creating open-source software.

“Taking the idea out of the realm of crypto, this would be akin to Microsoft being liable for someone plagiarizing an essay in a Word document or Gucci being liable for someone carrying stolen cash in their pocketbook,” Cato Institute’s post says.

“This is something out of Putin’s playbook”

This level of liability is clearly overly broad, says the post.

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