Crypto Firms Must Comply With Russian Sanctions And Avoid Becoming A ‘loophole’ Business

Cryptocurrency firms have been told to step up their efforts to impose sanctions on Russia amid concerns the Treasury fears new financial technology could be used to evade measures.

The Financial Conduct Authority said it was “actively monitoring” cryptocurrency brokers to ensure they applied sanctions against the Russian elite.

Meanwhile, UK industry body CryptoUK has written to companies urging them not to become “a loophole for sanctioned Russians”.

The FCA, Treasury and MPs have held talks with cryptocurrency officials in recent days, while the White House is reportedly weighing new measures to ensure wealthy Russians cannot embezzle their wealth through cryptocurrencies.

An FCA spokesperson said: “As you would expect, we have contacted every crypto company registered with us to ensure they are aware of the penalties and their responsibilities. We work with partners to actively monitor these companies.

“We have made it clear to crypto firms, banks and others that we expect them to focus on their sanctions checks and, together with our partners, we will oversee their actions.”

Ian Taylor, executive director of industry body CryptoUK, said: “We recognize that much of the crypto industry is unregulated and therefore allows for some sanctions evasion.

“CryptoUK is speaking with the Treasury’s illicit finance and economic crime teams to engage on this issue. We also participated in a National Crime Agency public-private partnership call to see what the industry can do to help.

“We have a two-tier system in the UK where only 34 crypto companies hold an FCA license covering anti-money laundering. Another 150 companies are unregulated and not required to comply with sanctions. We are reaching out to this cohort to make suggestions and make sure they don’t allow their platforms to become a loophole for sanctioned Russians.

A Treasury spokesperson said: “Our financial sanctions cover funds and economic resources of all types, including crypto-assets. Those who seek to circumvent our sanctions will face coercive measures. »

Bruno Le Maire, the French finance minister, said yesterday that EU sanctions against Russia would include cryptocurrencies. The US government has also pressured cryptocurrency exchanges to block sanctioned Russians.

However, Changpeng Zhao, the head of the world’s largest cryptocurrency exchange, Binance, said he would not cut off Russian citizens, despite pleas from Ukrainian Deputy Prime Minister Mykhailo Fedorov.

“We distinguish between Russian politicians who start wars and normal people, many normal Russians don’t agree with war,” Mr Zhao told BBC Radio 4.