Grewal says that laundering money through traditional financial institutions is still the most popular way to get around sanctions.
Coinbase, a crypto exchange based in the United States, has suggested that cryptocurrencies could be used to make sure that businesses don’t break economic rules. This suggestion comes from pointing out how easy it is to launder and evade sanctions with fiat currencies because of the way traditional financial infrastructures work, like banks.
Coinbase’s chief legal officer, Paul Grewal, wrote the blog. It talks about the wide range of global sanctions that have been put in place because of the conflict between Russia and Ukraine. The crypto exchange agreed with the government’s decision to put sanctions on people and places, saying that it was important to “promote national security and deter unlawful aggression.”
https://t.co/h08YXYgAoM Sanctions play a vital role in promoting national security and deterring unlawful aggression, and @coinbase fully supports these efforts by government authorities. They are best placed to decide when, where, and how to apply them.
Paul Grewal (@iampaulgrewal) March 7, 2022
Grewal says that even though governments have put sanctions in place over the years, laundering fiat money through traditional financial institutions is still the most popular way to avoid sanctions.
“By transacting through shell companies, incorporating in known tax havens, and leveraging opaque ownership structures, bad actors continue to use fiat currency to obscure the movement of funds.”
However, Grewal said that digital asset transactions are inherently public, traceable, and permanent. This is an important feature that can be used by governing bodies to find and stop people from avoiding them. Read more; Crypto Airdrops, Swap A Valuation Hurdle
2/ Every US company has to follow the law – it doesn’t matter if your company handles dollars, crypto, gold, real estate or even non financial assets. Sanctions laws apply to all US people and businesses.
Brian Armstrong – barmstrong.eth (@brian_armstrong) March 4, 2022
Cryptocurrency lawyer Jake Chervinsky also said that governments can’t use cryptocurrencies to avoid sanctions because they can’t use them to buy things like gold. People who want to fight sanctions would need “virtually unobtainable amounts of digital assets,” said Grewal, who added:
“As a result, trying to obscure large transactions using open and transparent crypto technology would be far more difficult than other established methods (e.g., using fiat, art, gold, or other assets).”
People who sign up for Coinbase won’t be able to get into the site if they’re on a list of people or groups that aren’t allowed to. Coinbase also tries to catch people who try to evade the system by using a sophisticated blockchain analytics program. Read also; How Much to Invest in Cryptocurrency, According to 5 Experts
Another thing that has happened is that other crypto businesses have started taking steps to make it more difficult for people to use cryptocurrencies, based on the sanctions recommended by the US government. Among other things, crypto wallet provider Satoshi Labs, which is based in Prague, says it will no longer ship crypto wallets to Russia. People who work for Satoshi Labs say that while Bitcoin (BTC) isn’t political, they made the decision to limit the shipping of crypto wallets in Russia because “company employees have connections to the conflict.”
Over a transparent blockchain, cryptocurrencies play an important role in protecting the privacy of people. This is a principle that is already in place in the traditional financial system. That was the last thing Grewal said.
“We believe we can balance these interests by continuing to support law enforcement efforts while promoting policy frameworks that respect individual privacy.”
It was in the first week of March that the New York State Department of Financial Services (DFS) announced that they were going to use blockchain-based technology to keep up with global sanctions.
#ICYMI: @GovKathyHochul announced new actions to strengthen #NYDFS enforcement of sanctions against #Russia. Read more here➡️https://t.co/y3QbVl0VxQ.
NYDFS (@NYDFS) March 2, 2022
As reported by Cointelegraph, the DFS plans to speed up the purchase of more blockchain analytics technology to help identify Russian individuals and businesses linked to DFS-licensed virtual currency businesses.
