Coinbase, a cryptocurrency exchange located in the USA, has recommended the use of cryptocurrencies to facilitate compliance with economic sanctions imposed on Russia on account of the Russia-Ukraine crisis. The recommendation of Coinbase also highlights the easiness with which fiat money may be laundered and sanctioned avoided using banking infrastructures.
There are a widening variety of global financial sanctions imposed on Russia amid the Russia-Ukraine crisis. The cryptocurrency exchange backed the government’s decision to impose penalties on individuals and countries, emphasising the need to “enhance national security and prevent illegal activities.” Coinbase has taken proactive actions like blocking access to designated companies during the registration process, identifying evasion efforts, predicting threats, and a few other proactive actions to build a worldwide sanction program.
According to Coinbase’s Chief Legal Officer Paul Grewal, “despite the many sanctions imposed by countries throughout the years, the most popular form of sanction evasion is the laundering of fiat money through established financial institutions. However, digital asset transfers are fundamentally public, traceable, and permanent. Therefore, authorities can use this characteristic to identify and prevent evasion because of digital assets.”
Furthermore, based on the sanctions suggested by the US government, other crypto firms have begun to take steps to further discourage the usage of cryptocurrency. One example in this direction is about Satoshi Labs. It is a crypto wallet supplier located in Prague. It has declared that it will no longer send crypto wallets to Russia.
In a similar development, the New York State Department of Financial Services (DFS) has recently announced the launch of a blockchain-based system to aid in the enforcement of ongoing global sanctions on Russia.