WASHINGTON — As the U.S. searches for new ways to punish Russia for invading Ukraine, Sen. Elizabeth Warren, D-Mass., is crafting legislation she hopes will make it harder to use cryptocurrency to evade sanctions.
The bill, still in draft form, has taken on new urgency as bipartisan concerns grow that members of Moscow’s elite might be able to sidestep sanctions by using digital currencies. It aims to force companies to choose between doing business in the U.S. or with sanctioned people and entities by threatening secondary sanctions on foreign crypto exchanges.
Warren and the chairmen of three key Senate committees raised the issue with Treasury Secretary Janet Yellen last week when they requested details about the Treasury Department’s enforcement of compliance with Russia sanctions by the industry.
“Strong enforcement of sanctions compliance in the cryptocurrency industry is critical given that digital assets, which allow entities to bypass the traditional financial system, may increasingly be used as a tool for sanctions evasion,” Warren wrote in a letter signed by Intelligence Committee Chairman Mark Warner of Virginia, Banking Committee Chairman Sherrod Brown of Ohio and Armed Services Committee Chairman Jack Reed of Rhode Island.
The Biden administration has imposed sanctions on Russia’s central bank and defense industry, as well as President Vladimir Putin and wealthy members of his inner circle.
While the administration has the authority to unilaterally impose crypto sanctions, Warren’s bill could be used to apply pressure, much as Congress has ratcheted up calls for President Joe Biden to prohibit Russian oil imports.
Lawmakers on both sides of the aisle worry that cryptocurrency is emerging as a workaround to existing sanctions.
“Cryptocurrency is rearing its ugly head here,” Sen. Lindsey Graham, R-S.C., said last week after a classified briefing on Ukraine. “As you sanction the [Russian] central bank, which is a good thing, I worry about…
