US Lawmakers Push Treasury To Ensure Russia Cannot Use Cryptocurrency To Avoid Sanctions (reuters.com) 112
An anonymous reader quotes a report from Reuters: Senator Elizabeth Warren and three other Democratic lawmakers on Wednesday urged the Treasury Department to ensure the cryptocurrency industry is complying with sanctions imposed on Russia, expressing concern that digital assets could be used to undermine U.S. foreign policy goals. In a letter sent to Treasury Secretary Janet Yellen, Warren along with Senators Sherrod Brown, Mark Warner and Jack Reed questioned whether the department's Office of Foreign Assets Control (OFAC) had effective guidelines in place to enforce sanctions compliance within the crypto 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," the letter said.
Biden administration officials have said that they do not believe Russia would be able to use cryptocurrency to completely evade sanctions. "The scale that the Russian state would need to successfully circumvent all U.S. and partners' financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state," said Carol House, the director of cybersecurity for the National Security Council, during a webinar on Wednesday. But the Democratic lawmakers said it was unclear whether OFAC had appropriate guidelines to effectively monitor the crypto industry's compliance with sanctions, noting that the agency has become "increasingly reliant upon voluntary self-disclosure."
Biden administration officials have said that they do not believe Russia would be able to use cryptocurrency to completely evade sanctions. "The scale that the Russian state would need to successfully circumvent all U.S. and partners' financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state," said Carol House, the director of cybersecurity for the National Security Council, during a webinar on Wednesday. But the Democratic lawmakers said it was unclear whether OFAC had appropriate guidelines to effectively monitor the crypto industry's compliance with sanctions, noting that the agency has become "increasingly reliant upon voluntary self-disclosure."
So the US gov is calling a bluff on crypto (Score:4, Interesting)
If a government, ANY government, can prevent someone else to trade in crypto, crypto loses its main appeal and advantage. If the US suceeds in excluding Russia from crypto trading, crypto coins as a manner of storing and transferring wealth is dead.
If the crypto coin algorithms are safe against centralised interference, the US can only fail in trying to exclude Russia. The US could, at least in theory, ban any and all individuals in the US from trading in crypto, which also prevents the Russians from getting money in and out of the US. However, this kills the US democracy and liberty in the process, because trading in crypto is freedom of speech.
As far as I understand, owning a crypto coin is the exclusive knowledge of a very long number and being able to prove this knowledge mathematically. The blockchain is there to record who gained knowledge of that number in a transaction and who is supposed to claim ownership to that number right now. I know the actual details are far more complicated and nuanced than that, but for a legal perspective, when A and B are exchanging value in crypto, they are essentially talking about very long numbers to one another and a number of witnesses in the blockchain. Trading in crypto could, in theory and as far as I understand, be done by talking numbers over the phone, even though that would take a few months to finish. So unless people will be banned and prosecuting for talking numbers into a telephone, there's no way to stop crypto trading. And if that is made a punishable offense, good luck with the democracy and liberty.
And yes, even when trading with Russia is prohibited, the US can trade with Brazil, probably. And there will be a Russian with a Brazilian passport living in Rio de Janeiro who will promptly make the middle man in the trade.
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The US could, at least in theory, ban any and all individuals in the US from trading in crypto
Nope. Sorry, they absolutely can't, and if you think they can you don't understand crypto.
The grand master plan of crypto (Score:2, Informative)
The plan for all cryptocurrencies isn't what they want to make you think it is. It's more sinister than the egalitarian image the crypto bois portray for it.
After the 2008 financial meltdown, cryptocurrencies were born out of it, declared to be the means by which people could be freed from banks/governments, and promised to avoid any such future meltdowns from happening ever again.
But the crypto boys watched closely the result of that meltdown, and formulated their plan: create a new form of currency, and
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The US could, at least in theory, ban any and all individuals in the US from trading in crypto
Nope. Sorry, they absolutely can't, and if you think they can you don't understand crypto.
"Ban" is not "Prevent".
"Ban" is "don't lift your arms over your head under penalty of fine/jail/etc"
"Prevent" is chaining your wrists to your thighs.
The U.S., as a government, can enact laws banning lots of things. Some of those bans might be found unconstitutional and eventually struck down, but the bans could even be put in amendments to the constitution (see Prohibition Era). Other bans might be unenforceable or ludicrous. but they're still bans.
Re:So the US gov is calling a bluff on crypto (Score:4, Insightful)
From trading in crypto? Sorry to burst your bubble, but yes, government absolutely can.
Regulate exchanges and watch crypto prices freefall within a week.
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Perhaps converting crypto to fiat could be stopped, but does not stop anyone from trading crypto for products, services, or other crypto. Just can't convert to cash.
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The thing is, no matter what a few rabid fans believe, no one uses cryptocurrencies as currency. Even those sites that take it as payment - they just convert it to hard cash on the spot.
In particularly, the concern here is the avoidance of sanctions. Kill the off-ramp to convert Bitcoin to cash, and that problem disappears in 24hs.
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Really? No one? I guess youâ(TM)ve never heard of El Salvador.
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You know, there's a reason why BTC prices in El Salvador get adjusted to dollars, and not the other way around.
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Perhaps converting crypto to fiat could be stopped, but does not stop anyone from trading crypto for products, services, or other crypto. Just can't convert to cash.
But then all of those transactions have to happen on the blockchain, no aggregation and washing through exchanges. This means they'll all be subject to the long latencies and high costs... and if the volume goes up significantly, the latencies and costs will increase accordingly.
Current cryptocurrencies are not able to sustain even the tiny transaction volume they currently appear to carry. If you force them to do try, much less ramp up the volume to something significant, they'll just fail.
Re: So the US gov is calling a bluff on crypto (Score:2)
Lightning network, or many other high speed accumulative block chains. At least learn the basics before you blindly shit on the whole thing.
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The natural consequence of the way cryptocurrencies work, is that you have a concentration of power. Crypto transactions require a lot of processing power, which in turn costs money to build out and maintain, meaning over (a very short) time you end up with a relative handful of major players that dominate the scene. It's not feasible to regulate millions of small, independent actors, but it's also not feasible for millions of small, independent actors to handle all the logistics needed to support cryptocur
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It's not about which chain is being used or the algo. Any crypto system requires processing power. Lots and lots of processing power. And that processing power - and the electricity it requires - costs money.
That means processing power will tend towards people who have that money. Of course they aren't going to do that out of charity, so they will set up a business model where they can earn back that money (with profit) from processing other people's transaction requests.
All crypto is fundamentally a cloud
Re: So the US gov is calling a bluff on crypto (Score:1)
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The US could, at least in theory, ban any and all individuals in the US from trading in crypto
Nope. Sorry, they absolutely can't, and if you think they can you don't understand crypto.
They absolutely can, because of the blockchain. You can't hide in the blockchain. You have no plausible denyability in the blockchain. You have no anonymity in the blockchain.
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Yeah, that doesn't mean what you think it does. Your social security number is not recorded on chain believe it or not.
But if it gets in there - or someone puts it there - it stays there. As do all the records of your transactions.
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But the government can inspect your transactions and fine you real money, or your electronic pretend money, for having dealings with any entity they wish to ban trade with.
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You might freely and anonymously trade crypto currencies left and right, without none being the wiser. ...), the money trail becomes visible.
However, once you convert from cryptocurrencies into US dollars (or valuables under the purview of the US, like laptops,
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Depends on which one. Sure, the main blockchains for Bitcoin, Etherium, etc, are tracable. But other cryptos like Monero have no tracability. (But converting from Monero to cash is tricky, at least in the US, as most places like Coinbase won't touch it.)
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"ban" does not mean "prevent". Many drugs are banned, but still readily available.
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Even still, it would be unconstitutional.
In your dreams, maybe.
You're not using it to express an idea or opinion, you're using it as a store of value.
Good-bye, Freeze Peach—Hello, statutes and taxes and bans.
Let's all sing along:
Statutes and taxes and bans—oh, my!
Statutes and taxes and bans—oh, my!
Statutes and taxes and bans—oh, my!
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I'll take that to mean you concede the point I actually made.
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I mean, they made booze illegal for awhile, people drank anyway and they just lost on that revenue.
Some, but not all. Every time they busted a bootlegger they would seize any and all money related to that.
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Money is speech, corporations are people, my friend.
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Maybe I was unclear in my wording. With "Banning" I meant legal term, and the US government can, in theory, ban whatever the hell they want, because in legal sense, banning X requires nothing more than a piece of paper that says "X is banned".
If they can UPHOLD that ban (against an uprising or the Supreme Court), or ENFORCE it (when it is technically or logistically impossible to do so), is a totally different topic.
With crypto is hard to enforce a ban, but so is banning the ownership of gold, and the US tr
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See Gold Reserve Act of 1934
https://en.wikipedia.org/wiki/... [wikipedia.org]
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As another mentioned, the Gold Reserve Act of 1934 was extremely effective in banning the private ownership of gold bullion. They didn't, as the other person failed to mention, ban owning gold. You could still own jewelry and collectible coins. But getting caught with gold bullion / non-collectible coins was a big deal. Additionally, transporting / possessing anything gold in excess of 15 ounces required a license / permit.
Most troubling, in my opinion, is the fact that the gold was taken from people at a
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You see the other replies already mentioning the Gold Reserve Act, which I thought was common knowledge and thus did not source it in the first place.
Also, collecting water is regulated in some US states, and illegal in some communities
https://worldpopulationreview.... [worldpopul...review.com]
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I think you underestimate the government's ability to pass laws that they have zero ability to enforce (or to pass a second law that says almost the exact same thing as an existing law because the first one wasn't enforceable). For some of our officials, it's that it makes them feel warm in their jollies to seem to throw their weight around like that. For the more pragmatic of them, it's that a certain number of people will follow the law even if it's unenforceable, and that's better than nothing.
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The US government can ban crypto, what they can't do is enforce that ban.
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>> regulation ... all legitimate currencies have to adhere to
No.
Currency is not legitimated by regulation.
Currency gets it's legitimity from people's trust.
Re: So the US gov is calling a bluff on crypto (Score:2)
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Blockchain aren't currencies, they're unregulated commodities..
In the jurisdictions I know of they are treated as collectibles for tax purposes.
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Blockchain isn't either, it's a ledger. You mean cryptocurrencies.
Re: So the US gov is calling a bluff on crypto (Score:2)
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You're missing several key aspects, but I'll just focus on two for the sake of brevity.
1. None of it means shit unless the stuff you want to buy is digital itself. That is, you can purchase all the Bored Apes you want, but if you want to buy PHYSICAL GOODS that need to be delivered, then those can be tracked and stopped.
2. None of it means shit unless the entire chain of transactions is ONLY crypto. That is, if somebody in the chain ever wants dollars, pounds, euros, yen, etc. then they're in for a rude sho
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"Ever" is a long time though. One play would be to convert your assets in the US into something that can't be confiscated (like bitcoin you possess) in hopes of riding it out until the sanctions are lifted or you find a way to work around them.
But yes, money laundering. It's not mone
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You structurally misunderstand the situation.
The US gov't can't do a thing about people buying things with crypto that are sold in crypto. What they *can* do something about is when people try to exchange that monopoly money into real money or the other way around.
The exchanges that goes through are most definitely susceptible to the law.
So Russia could buy all the stuff they want with crypto, as long as there's someone actually selling all that stuff for crypto (spoiler: There almost certainly isn't), and
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The US gov't can't do a thing about people buying things with crypto that are sold in crypto.
I don't see how you can say that. Unless you can read some constitutional right to exchange crypto into 1A/4A/9A/10A some how which I think would be a huge stretch; I don't see what stops the government for doing whatever they like about people buying and sell crypto or buying and selling other things with crypto.
My state has a use tax, I am supposed to pay what is essentially sales taxes on things bought elsewhere unless I was taxed on them there. They have no direct way to know of course but that does n
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Russia needs: ... Crypto currencies will not help ... Russia is an exporter of gas and has some oil production and reserves, but it might not be enough. ...
-to influence outside actors (you could pay bitcoins for that)
-to pay its troops, pensions, ambassadors,
-to buy some types of foods (they export grain, but import - let's say rice)
-I'm not sure about the energy situation - electricity, fuels,
-Also, Russia has some mineral resources - but it might still imports machinery, chemicals,
Even during the Soviet
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If a government, ANY government, can prevent someone else to trade in crypto, crypto loses its main appeal and advantage. If the US suceeds in excluding Russia from crypto trading, crypto coins as a manner of storing and transferring wealth is dead.
And if the US failed, it would put crypto into the crosshair of the US govt, and there will be bans and sanctions on any company producing chips aimed at mining bitcoins, ban on any financial companies dealing with crypto (goodbye crypto funds), ban on power stations doing deals with crypto mining rigs, raids on crypto mining rigs, etc, etc.
Interesting to see how long the crypto scam can last in that case when non-criminal money stopped feeding into the Ponzi scheme.
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If the US suceeds in excluding Russia from crypto trading, crypto coins as a manner of storing and transferring wealth is dead.
False. As long as most people can use it for money laundering most of the time, or frankly even if some people can use it for money laundering some of the time, it will continue to be used.
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Money laundering is happening with every currency and items of value - including US dollars, gold, jewels, ...
So, crypto currencies will continue to be used - but the increase in risk will lead to a decrease in value (or at least a decrease in value for the money launderers).
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The Achilles heel of crypto is that people eventually want to convert it to stuff. As soon as you buy a yacht or a house with your crypto, a court can declare your title void and take it away from you. The idea that crypto puts wealth beyond the reach of government is wishful thinking.
So you don't necessarily have to prevent anyone from trading in crypto. You can use regular money laundering investigations to find out where Russian money is going and seize the stuff of the entities engaged in crypto mone
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>trading in crypto is freedom of speech.
>As far as I understand, owning a crypto coin is the exclusive knowledge of a very long number and being able to prove this knowledge mathematically.
>etc
Nope.
Not unless a Stock is freedom or speech, or simply money. OR your checking account where you need the account number and password. That must also be a freedom of speech issue!
There's really no point. (Score:3)
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A lot of Chinese banks are already refusing to accept rubles and/or make payments to Russia in dollars or yuan.
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The Chinese government doesn't need to do anything except not order Chinese banks to accept rubles and/or make payments to Russia in dollars or yuan.
Which appears to be exactly what it has not done. :-)
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They actually are hoping to do similar shit in Taiwan and Hong Kong.
I don't know about Taiwan, but the last time I was in HK (2½ years ago), the PLA already had a garrison there, in the old Prince of Wales Building.
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You are a complete and utter shit-weasel.
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Hong Kong is a Chinese province (and it has been for some 20 years). ...
Taiwan is (depending who you ask) a country, a nest of pirates inhabiting Chinese (as in Popular Republic of) land, an economic partner,
Considering what's happening in Russia, China will probably make new plans for Taiwan.
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Hong Kong has been part of China since 1997.
And you are a lying shit-weasel.
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Learn some history, dipshit.
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Zontar is either making up falsehoods or misinterpreting news he heard, but Chinese banks do take US sanctions seriously. There have been news stories about Chinese banks restricting financing for purchases of Russian commodities [bloomberg.com], but it is unclear if these are just temporary. There are also reports of Chinese exporters suspending deliveries to Russia because of currency concerns. Nothing even close to as serious as what Zontar was describing though.
This still isn't just as easy as using China as a middlema
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China is not one of the countries sanctioning Russia. I really doubt their banks would defy their government.
https://www.upi.com/Top_News/W... [upi.com]
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I've not seen the Chinese government actually order Chinese banks to do anything regarding the situation. Let us know when that changes.
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Russia will evade banking sanctions the obvious way, by using Chinese banks as middlemen. Using crypto would be retarded for obvious reasons.
... and then those banks will be sanctioned causing them to quickly rethink the wisdom of losing a dollar to sanctions in order to make a few pennies from helping Putin. Nobody wants this war, it gets in the way of business and anybody who helps out Putin will be doing it out of ideological motivations, not because it makes a huge amount of business sense to help him. But feel free to try again, I'm sure you pour enough metaphysical Jordan Peterson logic into your deliberations you will sooner or later find
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Anything is possible after the Huawei debacle (Chinese company under US sanctions).
I'm not saying that one side is wrong or right - all I'm saying is that Huawei is still under sanctions, several years later.
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I don't see banking sanctions extending to China. Maybe you're right but I don't see it.
For one thing the US could decide to sanction anybody who who provides Russia with war critical supplies or finances Putin's war in any form. The US has done that before. Secondly two Chinese state owned banks the Industrial & Commercial Bank of China and the Bank of China have already announced they won't be financing Russian commodities. Furthermore Chinese banks have in the past complied with U.S. sanctions against Iran and North Korea because they need access to the U.S. dollar clearing system, same
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Russia will evade banking sanctions the obvious way, by using Chinese banks as middlemen.
No need for Chinese bank_s_, they just need one. One single bank that do not do any business with any other banks outside of China is enough.
Guess what, there is already one such bank and they have been dealing with Russia for years, notably for Russian oil trade, and very profitably too. There is zilch that the US can do about it short of declaring war on China.
And since Russia share a land border with China, in the worse case China fall back to bartering by paying Russia in goods, transported by trains.
Re: There's really no point. (Score:2)
If they have to resort to cross-border trade, then the US has already won that fight. Fairly certain China, knowing that they are the only option, would be demanding bargain basement prices for everything.
The London spot price for gold is $1,500 an ounce? How's $800 an ounce sound? No, how about $750? Going once, going twice...
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There is zilch that the US can do about it short of declaring war on China.
China is hardly immune from sanctions if they want to join with the Russians in their enjoyment of same.
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The Chinese are not willing to risk the financial counter strikes of EU and USA.
Smaller trade wars started for lesser reasons, and the cost to China was entirely too much.
So, maybe the Russia-China business will go on as before - but it will continue to be direct Russia-China business, not "China is the middleman to everywhere" business.
You might remember the UK has forbidden "ships related to Russia" in its ports (Russian flag, Russian ownership, ...). As Putin is piling military attacks on Ukraine, EU and
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Russia will evade banking sanctions the obvious way, by using Chinese banks as middlemen. Using crypto would be retarded for obvious reasons.
Turn on the news. That's not what's happening. Well, I'm sure some is.. But most Chinese banks appear to be playing ball. Few want to risk being shut out of SWIFT. A bank that cannot participate in that system is effectively dead. It would appear that the Chinese banks are being very careful to not run afoul of the sanctions.
Liquidity (Score:2)
The key here is scale. Cryptocurrency is very good for trading cryptocurrency or blockchain "assets" like NFTs, but amount of value that trades in and out between it and the broader banking system is many orders of magnitude smaller than the trading between different cryptocurrencies. Any attempt to rad
NFT (Score:2)
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Stupid cunt.
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That's a great exit strategy (Score:3)
How would this work? (Score:2)
I'm not seeing how crypto would allow Russia to evade any sanctions in any way we could block. Is their idea that banks that are located in jurisdictions without sanctions who are holding Russian state assets would allow the Russians to to exchange their assets for bitcoin which they could then 'transfer' back to Russia (i.e. buy hard rubbles using bitcoin) thereby evading SWIFT?
I understand that concern (it's why I broke my rule on index funds only and stashed a few hundred bucks in bitcoin before this sh
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replace SWIFT with SWIFT and other interbank transfer mechanisms blocked by sanctions.
Just ban it entirely already (Score:2)
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>Offer otherwise law-abiding people, who were roped into and fell for the crypto meme,
>a one-time grace period during which they can sell off their cryptocurrency, after which it becomes illegal to posess or traffic in.
Well, THAT won't work the way you are imagining it: as soon as the grace period is announced, Bitcoin becomes value-less. See, the only way to sell it is to find a buyer, and as soon as this "grace period" is announced, the market will be 0% buyers and 100% sellers...and Bitcoin instant
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I have to agree with you there.
More to worry about... (Score:2)
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Ewe R vry smert!! Hurr hurr