The European Central Bank's president: Crypto is being used to avoid sanctions, and that exchanges may be 'accomplices.'

The European Central Bank's president has urged trading platforms to crack down on individuals who use cryptocurrency to avoid penalties.

Cryptocurrencies are being used to get around sanctions against Russian people, the head of the European Central Bank says.

Lagarde said that crypto exchanges could become "complicit" in this crime, and that they should be aware of this:
"We have taken steps to clearly signal to all those who are exchanging, transacting, offering services in relation to crypto assets that they are being accomplices to circumvent sanctions."
People were listening to Lagarde speak at the Bank for International Settlements Innovation Summit in 2022. The Atlantic Council's Josh Lipsky was there to talk with her.

European officials are worried that digital assets could be used to make sanctions against Russia less effective. This is because Russia invaded Ukraine.

Crypto exchanges could see Lagarde's comments as a warning that they need to do more to make sure their trading platforms aren't used by people on sanctions lists. But major brands have said they don't want to freeze the accounts of all Russian users.
 

 

How Big a Problem is This?

Coinbase said earlier this month that it had blocked more than 25,000 addresses that were linked to Russian people or businesses that were suspected of doing illegal things.
Cryptocurrency intelligence firm Elliptic said last week that it had found a wallet with "significant cryptoasset holdings" worth a lot of money that may be linked to Russian officials and oligarchs who have been put on a list.

Cryptocurrency markets are small, and many experts think they can't be used to avoid sanctions on a systemic level. There isn't enough liquidity, and blockchain technology makes it easy to see everything that happens. There aren't many effective ways to get back into fiat money anonymously.
In the last few days, the U.S. Sen. Elizabeth Warren, who has long been against cryptocurrencies, has proposed a bill that would give the White House more power to stop Russians who are using crypto.

To stop American crypto exchanges from processing transactions with wallets that are in Russia, Janet Yellen, the secretary of the Treasury, would be able to do this. Her department would also be asked to name and shame foreign trading platforms that are a "high risk" for sanctions evasion, money laundering, or other illegal activities, so that people would know which ones to avoid.
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