- The Department of Financial Services has procured blockchain analytics software to monitor Russian usage
- The department announced an “expedited procurement” on Wednesday
- There have been unsubstantiated claims that Russia will use crypto to evade sanctions
U.S. authorities will use blockchain analytics software to track Russian use of cryptocurrency, the Department of Financial Services (DFS) said on Wednesday. The DFS said the use of such software would allow it to keep an eye on “Russian individuals, banks and other entities that the Biden Administration has sanctioned” to ensure that these entities cannot use cryptocurrencies to evade sanctions. Despite the wide debunking of such claims, high profile figures are still using the excuse of Russian sanction evasion to call for swift regulation of the sector.
DFS Targets “Bad Actors”
The DFS announced “expedited procurement of blockchain analytics tools” on Wednesday, with Superintendent of Financial Services Adrienne A. Harris saying that the DFS knows that “bad actors will try to evade sanctions through the transmission of virtual currency”, adding that “it is imperative that we have the ability to monitor transactions and exposure in real-time.”
This echoes statements made by Federal Reserve chair Jerome Powell and Senator Elizabeth Warren who, with no evidence, said that sanctioned Russian individuals and businesses would be able to evade sanctions through cryptocurrencies. This theory has been dismissed by many educated people in the cryptocurrency space, but it hasn’t stopped the claims being repeated and in some cases amplified by those in powerful positions.
Crypto Space Fears Emergency Action
As a result of this narrative being spread, there is a theory growing in the cryptocurrency space that the theoretical use of cryptocurrency by Russia to evade sanctions will be used to enact harsh and swift action against the space, potentially in the form of an executive order.
Until evidence of use of cryptocurrencies to evade sanctions to the degree claimed is obtained, such a theory cannot be discounted.
