On May 6, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated a cryptocurrency mixer, Blender.io, as a Specially Designated National (SDN). That sanction follows a series of enforcements and sanctions which we have previously discussed here and here.Continue Reading The Crypto Enthusiast and The Regulator: What OFAC is, Could Be, and Should Be Doing to Regulate CryptoCurrencies
The recent comprehensive economic sanctions by the U.S. and other nations against Russia has propelled the crypto community onto the geo-political stage in a major way. As with other forms of payment and methods of money transmission, cryptocurrency and cryptocurrency exchanges are at risk for exploitation by criminal actors, including those attempting to evade economic sanctions. Several attributes of cryptocurrencies that are usually touted in favor of the technology—pseudonymity, decentralization, digitalization—are now giving government officials, regulators, and lawmakers cause for concern in the sanctions climate. In response, leaders in the crypto community are voicing support of sanctions compliance, and citing aspects of the technology—traceability, immutability, visibility—in reassurance of it. As discussed below, there are several steps that crypto platforms can take to further efforts in blocking and detecting sanctions evasion activity on their platforms.
Continue Reading Crypto and Russia Sanctions: A Primer and Survival Guide For Crypto Companies
A lot of us in the sanctions compliance world were wondering whether and when OFAC would issue official guidance on its application of sanctions in the digital currency world. On March 18, OFAC issued five FAQs related to virtual currency. Those FAQs convey two important messages:
(1) OFAC sanctions regulations apply to virtual currency transactions just as they apply to “fiat” currency (here’s looking at you dark web crypto-user); and
(2) OFAC will use its existing authority to respond to the growing threat posed by the use of emerging payment systems by malicious actors, including adding digital currency addresses that are associated with blocked persons to the SDN List.
While the first point – that OFAC compliance obligations apply to virtual currency transactions – is not groundbreaking news, the second point is more interesting. Our key takeaway from the FAQs is: OFAC is clearly thinking about how it will enforce its regulations on virtual currency transactions and digital currency operators, so you should too.
Continue Reading Digital Cops and Cyber Robbers: OFAC Guidance on Crypto Currency
Russian President Vladmir Putin has directed his government to develop a state-backed cryptocurrency, according to a Financial Times report published on January 2nd. A Putin advisor says that the “Crypto-rouble” could be used to “settle accounts with our counterparties all over the world with no regard for sanctions.” He added that Russia’s cryptocurrency would be “the same rouble, but its circulation would be restricted in a certain way.”
There’s a lot to unpack there. Broadly, establishing a cryptocurrency that the Kremlin can track defeats two of the main purposes of cryptocurrency: to provide anonymity and to remove government central banks from transactions.
Continue Reading Could the Crypto-Rouble Spell Crypto-Trouble for Sanctions?