Senate Democrats Introduce the Improved Digital Asset Sanctions Compliance Act of 2022
On March 17, Senators Elizabeth Warren (D-MA), Jack Reed (D-RI), Mark Warner (D-VA), and Jon Tester (D-MT) introduced the Digital Asset Sanctions Compliance Enhancement Act (Act) in an attempt to ensure that blacklisted Russian individuals and companies do not use cryptocurrency to evade economic sanctions.
“For the sanctions imposed by the United States and our allies to have the maximum impact on Vladimir Putin and his oligarch friends, we must close the avenues they might use to evade these sanctions. This legislation will crack down on foreign actors who help sanctioned Russians use digital assets like cryptocurrencies to circumvent the crippling measures we have put in place to punish Russia for its barbaric invasion of Ukraine,” the senator said. Warner.
The law would do the following:
- Demand that President Joe Biden, within 90 days of the passage of the law, submit a report to Congress, identifying foreign persons who operate a digital asset exchange platform and facilitate the evasion of sanctions against Russia. It allows the President to block all escape-prone transactions in the United States
- Authorize the Secretary of the Treasury to require that no digital asset exchanges be used to transact with cryptocurrency addresses known to be or may be affiliated with Russia.
- Require the Financial Crimes Enforcement Network (FinCEN) to compel U.S. taxpayers engaged in offshore transactions over $10,000 to file FinCEN Form 114 (FBAR) cryptocurrency.
- Require the Secretary of the Treasury to submit reports on the implementation of the provisions of the act and on any additional resources the Treasury Department may require.
- Require the Treasury Department to issue a public report identifying foreign digital asset trading platforms deemed to be at high risk of sanctions evasion, money laundering, or other illicit activity.
The bill is not without controversy. The current version of the law states that “the term ‘digital asset transaction facilitator’ means – any person or group of persons who significantly and materially facilitates the buying, selling, lending, borrowing, trading, custody, possession, validation or creation of digital assets on behalf of others, including any communication protocol, decentralized financial technology, smart contract or other software, including open source computer code. political group Coin Center said: “The bill would impose sweeping restrictions on people who build, operate and use cryptocurrency networks even if they have no knowledge or intent to help anyone evade sanctions.” Coin Center quoted FBI Director Christopher Wray’s statements during a Senate Intelligence Committee hearing: “The Russians’ ability to circumvent sanctions with crypt o-currency is probably greatly overrated by perhaps them and others. We are, as a community and with our partners overseas, much more effective in this regard than I sometimes think they appreciate.
At the March 17 Senate Banking, Housing, and Urban Affairs Committee hearing on “Understanding the Role of Digital Assets in Illicit Finance,” Sen. Pat Toomey (R-PA) agreed with witnesses who said US officials had found no evidence. of the widespread evasion of Russian sanctions via cryptocurrencies so far, but he noted that Ukraine was using cryptocurrencies to raise tens of millions to support its military.