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Close loopholes to prevent crypto investors from dodging Russia sanctions, says EU lawmaker

Illustrative image of cryptocurrencies with Russian flags
FILE PHOTO: Depictions of cryptocurrencies are displayed in front of Russian flags in this illustration taken on March 4, 2022. REUTERS/Florence Lo/Illustration

March 4, 2022

By Huw Jones

LONDON (Reuters) – The European Union should introduce measures to close loopholes that could allow investors in cryptoassets to circumvent sanctions against Russia over its invasion of Ukraine, a senior lawmaker said on Friday.

As Russia’s invasion escalates into its second week, Markus Ferber, a senior center-right German MEP, said there could be ways to circumvent the bloc’s sanctions that have severed the EU’s financial system from Russia.

There has been a noticeable increase in ruble crypto transactions, Ferber said.

“The European Commission needs to make concrete proposals on how to close any loopholes in the sanctions regime related to cryptoassets,” Ferber said in a statement.

Some of the world’s largest cryptocurrency exchanges remain in Russia, breaking with mainstream finance in a decision experts say is weakening Western attempts to isolate Moscow.

S&P said in a report on Friday that the crypto market has yet to reach a scale that could mitigate the likely severe fallout from sanctions on Russia.

“In our view, the surge in interest in Bitcoin is primarily due to customers looking to protect their savings against a weaker domestic currency, along with other local asset writedowns,” S&P said.

An EU official said the bloc’s sanctions apply to all financial transactions, regardless of how they take place, with the ban on lending to Russian companies covering credit in all its forms, an EU official said.

“We believe that timely and efficient bypassing of restrictions via crypto is not immediately possible,” the official said.

Although cryptocurrency sanctions evasion is more difficult to detect a priori, once detected, they are fully traceable, the EU official said.

Crypto transactions are recorded on a blockchain designed to be difficult to alter.

The official added that if large amounts of cryptoassets were converted back into currencies, they would be subject to anti-money laundering.

“We will assess whether the risks of circumvention are significant and stand ready to take additional measures to limit risks of circumvention,” the official added.

The U.S. Treasury Department also said Russian companies or individuals could not use crypto to circumvent sanctions, citing issues with converting digital currencies into traditional money through financial firms that are subject to anti-money laundering regulations.

(Additional reporting by Francesco Guarascio in Brussels; Editing by Elaine Hardcastle and Jonathan Oatis)

https://www.oann.com/close-loopholes-to-prevent-crypto-investors-bypassing-russia-sanctions-eu-lawmaker-says/?utm_source=rss&utm_medium=rss&utm_campaign=close-loopholes-to-prevent-crypto-investors-bypassing-russia-sanctions-eu-lawmaker-says Close loopholes to prevent crypto investors from dodging Russia sanctions, says EU lawmaker

Emma Bowman

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