- Use of crypto for Russian sanction evasion is “fairly small” according to a Treasury official
- Nellie Liang told Reuters that the crypto space simply couldn’t absorb the amount of money held by Russians
- Liang added that there was certainly enough cash going round to do the job effectively
The U.S. Treasury is seeing an increase in illicit use of cryptocurrency by sanctioned Russian users, but the transaction size is “fairly small” and certainly not on par with the kind of usage critics have warned about. In an interview with Reuters, Nellie Liang, Treasury undersecretary for domestic finance, agreed with cryptocurrency analysts who said that the size of the digital assets market is not big enough to support wholesale sanction evasion, adding that cash was still by far the best option open to Russian sanction evaders.
Warren’s Sanction Avoidance Concerns Invalidated
The prospect of sanctioned Russians using cryptocurrency to protect their wealth was raised very soon after the first round of sanctions were announced, but it is clear that this was a knee-jerk reaction based on pre-existing biases rather that actual analysis, statistics, or, in many cases, common sense.
Chief among the critics has been Senator Elizabeth Warren, who has shown herself to be sensationally out of touch with current thinking when she introduced the Digital Assets Sanctions Compliance Enhancement Act (DASCEA) last week, which opponents (which are plentiful in number) says impinges on American privacy rights and will not tackle the perceived issue.
Cash is Still King for Sanction Evasion
Warren’s worries about sanctioned Russians escaping through a digital ‘rat line’ don’t seem to be borne out at all, with Liang telling Reuters that the evidence doesn’t back up the theory to date:
The transaction size we’ve seen is fairly small. Of course, we recognize we may not see everything, but there is a fair amount of oversight. At this point, we just don’t see that it could be used in a large-scale way to evade sanctions.
Liang added that there was one form of money that certainly could be used to evade sanctions at scale – cash:
While it’s (illicit money routing) growing because the use of crypto is growing, its share as a medium for illicit finance is not anywhere as large as just using cash.
It’s lucky for Liang that she wasn’t being questioned by Warren or by this point she simply would have been talked over.
