Cryptocurrency Group Lobby Congress Against Bills Targeting Russian Oligarchs

The cryptocurrency industry has quietly lobbied US lawmakers against legislation aimed at preventing Russian oligarchs from using digital currencies to evade sanctions imposed on Russian President Vladimir Putin’s allies and their businesses in the aftermath of Russia’s attack on Ukraine.

The Blockchain Association, a lobby group that represents more than 70 crypto platforms including Ripple, Crypto.com, and Dragonfly Capital, is trying to convince Congress that cryptocurrencies aren’t being used by wealthy Russians to avoid sanctions. He is working with Forbes lobby outlet Tate Partners against legislation that would impose penalties on already penalized Russians who aim to use crypto as a way to avoid sanctions. The bill would also empower the Secretary of the Treasury to block US-based crypto trading platforms from doing business with those in Russia.

Two bills have been introduced in the US House and Senate that give the Biden administration the power to ban US crypto exchanges from processing payments from Russia. It would also allow US authorities to sanction foreign exchanges that process transactions by sanctioned Russian individuals or companies.

The legislation poses a serious threat to the industry, which critics say has become popular for clandestine transactions because they cannot be traced. This would essentially subject digital currencies to some of the same rules that require federally insured banks to know their customers, fight money laundering, and report suspicious transactions to regulators.

The group says it’s helping Congress “separate fact from fiction about Russia’s inability to move large sums of money via crypto transactions in order to evade sanctions,” said Curtis Kincaid, gatekeeper. -word of the group, in an e-mail. A representative for Forbes Tate Partners declined to comment, referring CNBC to the Blockchain Association for questions.

The crypto industry has stepped up its lobbying efforts as the Biden administration carefully considers whether and how to regulate digital assets. President Joe Biden signed an executive order in March calling on regulators to review the risks and benefits of cryptocurrencies.

The Blockchain Association spent $460,000 on its own in-house lobbyists in the first quarter, a record amount since its launch in 2018, according to lobbying disclosure records. The crypto lobbying boutique said last year that it received more than $4 million in donations from three crypto giants: Digital Currency Group, Kraken, and Filecoin Foundation.

The group is pushing Russia’s Digital Asset Sanctions Compliance Law, according to its Q1 report. The House bill would target Russians and their affiliates who attempt to use cryptocurrency to circumvent their own sanctions. Crypto industry leaders say digital currencies cannot be used to evade sanctions.

Some lawmakers, however, argue that digital currencies should be regulated the same as a bank, as the industry markets itself as an alternative banking system. The United States has sanctioned a plethora of Russian-based financial institutions, including the country’s central bank. The Treasury Department recently targeted bitcoin miners operating in Russia.

“The crypto industry sees itself as an alternative financial system, an alternative bank. Banks have been sanctioned left, right and center and banks are pulling out of Russia,” Rep. John Garamendi, D-California, cosponsor of the House Bill, told CNBC in a recent interview. “So if they imagine themselves to be a financial mechanism, then they’re in the same league, in the same situation, as Bank of America or a Russian bank.”

The group is also lobbying for the accompanying bill sponsored by Sen. Elizabeth Warren, D-Mass., in the Senate, according to its first-quarter lobbying disclosure report. The bill, titled the Digital Asset Sanctions Compliance Enhancement Act of 2022 and bearing a nearly identical name to that introduced by Democrats in the House, is also designed “to impose penalties regarding the use of cryptocurrency to facilitate transactions by Russian persons subject to sanctions,” according to a summary of the bill.

Warren, who is a member of the powerful Senate Finance and Banking Committees, recently told National Public Radio that the bill is meant to give the Treasury Department the tools it needs to strengthen its oversight of crypto platforms.

“Russian oligarchs can continue to use crypto to move their money. So we’re just going to give the Treasury permission to treat these crypto platforms much like banks are treated. That is, you have to know your client and you can’t deal with people who are violating the sanctions,” Warren said during the interview last month.

Warren accused the crypto industry of undermining US national security and sanctions against Russia.

“It’s no surprise that the unregulated crypto industry has deep pockets and an army of lobbyists fighting against ground rules to keep consumers safe, but it’s shocking that they’re also working to undermine US national security and our sanctions regime against Russia,” Warren Warren said in an emailed statement.

The Mortgage Bankers Association, a mortgage finance industry advocacy group, also lobbied against the Klepto Act, a bipartisan bill backed by Warren, along with Sens. Whitehouse, DR.I., Bill Cassidy, R-La. and Roger Wicker, R-Miss, according to the group’s Q1 report. A representative for the Mortgage Bankers Association did not return a request for comment.

The legislation is designed to expose the real estate “of oligarchs, kleptocrats and hidden international criminals in the United States, strengthen United States anti-money laundering safeguards, and provide law enforcement with the information necessary to find the luxury assets of kleptocrats in the United States. US financial system,” according to a press release.

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Cryptocurrency Group Lobby Congress Against Bills Targeting Russian Oligarchs


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