As Moscow’s war on Ukraine rages on and the Russian economy and currency spiral to new lows, Washington is reportedly trying out a new way to dial up the pressure on Putin: sanctions targeting cryptocurrencies like bitcoin and ethereum.
The Department of Justice announced early Wednesday a new task force broadly designed to enforce sanctions. As part of that, it will target efforts to use cryptocurrency to evade U.S. sanctions, launder proceeds of foreign corruption or evade U.S. responses to Russian military aggression.
Taking aim at Russia’s access to digital cash comes as the U.S. and its allies, including notoriously neutral Switzerland, levy heavy punitive measures against Moscow.
The concern is that the Kremlin, as well as other ancillary actors supporting the offensive on Ukraine, will evade the sanctions regime via digital tokens, which are not owned or issued by a central authority like a bank. Bitcoin, like most cryptocurrencies, is decentralized and borderless, which means that it doesn’t respect national boundaries. Because there is no central authority to block transactions, digital currencies are also resistant.
Since Russia invaded Ukraine on Feb. 24, stats from crypto data provider Kaiko show that transactions on centralized bitcoin exchanges in both the Russian ruble and the Ukrainian hryvnia have surged to their highest levels in months. This is likely part of the reason why Ukraine asked all the top crypto exchanges to ban Russian users — a request that has been rejected by many major players, who argue a move like that would go against the very reason why cryptocurrencies exist.