Estonia Calls for Crypto Restrictions Amid Russian Sanctions Evasion Fears

Estonia Calls for Crypto Restrictions Amid Russian Sanctions Evasion Fears

Estonian Prime Minister Kaja Kallas has warned against using crypto to avoid sanctions amid Russia’s invasion of Ukraine, saying Reuters.

“Our goal must be to completely isolate Russia from the free world,” Kallas reportedly told US Secretary of State Anthony Blinken earlier in the day.

Kallas also reportedly said that all Russian and Belarusian banks should be removed from the SWIFT payment system, and cryptocurrencies should be “restricted” to fill any penalty gaps.

Estonia’s prime minister is the latest in a growing line of public officials and bodies concerned about Russia using cryptocurrencies to evade sanctions imposed on it following the invasion of Ukraine.

Estonia joins the global community in concern

Ukrainian Deputy Prime Minister Mykhailo Fedorov first called on crypto exchanges to ban Russian users on February 27, three days after Russia invaded Ukraine.

“It is crucial not only to freeze addresses related to Russian and Belarusian politicians, but also to sabotage ordinary users,” Fedorov said. tweeted.

The concerns were echoed by French Finance Minister Bruno le Maire on March 2. The Mayor said that the European Union was “take measuresto prevent Russia from using cryptocurrency to evade sanctions.

Two days later, Japan’s financial services regulator and crypto industry body began to assess how Russia could evade sanctions through the use of crypto.

The United States has also expressed concern about this risk.

As early as October of last year, the US Treasury published a report it says cryptocurrencies could undermine sanctions, a long-established cornerstone of US foreign policy.

The report states that digital assets “provide malicious actors with the ability to hold and transfer funds outside of the collar-based financial system.”

To date, many cryptocurrency exchanges have not issued a blanket ban on Russian users, citing that there is no legal basis for doing so while reiterating that they would nonetheless comply with an imposed instruction. by the government.

Can crypto be used to evade sanctions?

There are many ways cryptocurrencies can be used to evade sanctions.

One such example is ransomware. Recent Research in String Analysis shows Russia earned 74% of the global ransomware industry’s profits in 2021.

Crane Hassold, former FBI agent and current director of threat intelligence at Abnormal Security, recently said Decrypt cryptocurrencies were the “main factor” behind the modern ransomware industry.

“It basically allows the overall ransomware payouts that we’ve seen previously to grow into some pretty crazy numbers,” he said.

North Korea, which has frequently engaged in cryptocurrency-related ransomware, has also co-financed its nuclear and ballistic missile programs through cryptocurrencies.

Bitcoin mining – in which President Putin has previously said Russia has a “competitive advantage” is another option.

To date, however, it is unclear whether the Russian government has purchased Bitcoin.

Finally, Russia could still turn to non-compliant exchanges to access cryptocurrencies, a risk that has already materialized in the past.

“We have already seen examples of crypto asset exchange services that have been complicit in enabling Russian-based criminals to launder large amounts of money,” said David Carlisle, director of policy and regulatory affairs. from blockchain analytics company Elliptic, during a recent online webinar. .

One such example was the SUEX exchange, which the US Treasury’s Office of Foreign Assets Control (OFAC) sanctioned in September 2021 under Executive Order 13694, which authorized the the imposition of penalties on those who are complicit in cyber activities against the interests of the United States.

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