The Blockchain Association, a lobbying group funded by Kraken, the Digital Currency Group, and other influential companies in the cryptocurrency industry, is currently engaged in a campaign to stop both the Russian Digital Assets Sanctions Compliance Act and the Digital Asset Sanctions Compliance Enhancement Act, as reported by CNBC.
The Acts would stop sanctioned Russians, many of whom are beneficiaries of the Putin regime, from moving funds via digital currencies like BTC and ETH. The Blockchain Association claims this is a cover for targeting “upstanding US crypto companies” amidst the Biden government’s quest to regulate the industry.
What would the new rules mean, and why is the Blockchain Association opposed to them?
Earlier this year, the United States sanctioned a wide range of Russian firms, including financial ones, right up to and including the country’s central bank. The proposed bills would target Russians who attempt to use digital currencies to evade these sanctions. If approved, the new rules would give the government the authority to ban U.S. exchanges from processing Russian payments and give authorities the power to sanction any foreign exchanges that continue to do so.
According to the Blockchain Association and its partner firm Forbes Tate Partners, Russians do not use digital currencies to evade sanctions, and the bills are part of a vendetta by Sen. Elizabeth Warren against “technology she doesn’t understand.”
These bills don't target Russian oligarchs, who aren't using (& can't use) crypto to evade sanctions. They target upstanding US crypto companies for no apparent reason except @SenWarren's crusade against a technology she doesn't understand.
— Jake Chervinsky (@jchervinsky) April 29, 2022
Opinion: ‘Crypto’ must accept that there’s no avoiding oversight and regulation
Time and again, we see the same names vehemently opposing any rules and regulations that would bring more transparency and oversight to the digital currency industry. Ironically, these same rules and regulations would give the industry the legitimacy it desires.
“Russian oligarchs can continue to use crypto to move their money around. So we’re just going to give Treasury the authorization to treat these crypto platforms much like the banks are treated. That is, you’ve got to know your customer and you can’t be dealing with people who are in violation of sanctions,” Sen. Elizabeth Warren stated.
Whether Russian oligarchs are really using cryptocurrencies to evade sanctions matter, the fact remains that this story and countless others like it prove that, one way or another, the U.S. and other powerful governments are determined to tame the cryptocurrency industry and bring an end to its ‘Wild West’ era.
Instead of embracing this inevitable change, we’ve seen the industry rally dozens of times against various proposed laws and regulations. Ironically, the imposition of these rules is often a consequence of the industry’s own conflicting objectives and narratives. For example, it’s unclear how a BTC-backed ETF can be approved without proper fraud controls or how ‘crypto’ can be seen as a legitimate alternative financial system without adhering to the same Know Your Customer and Anti-Money Laundering rules and laws as every other financial institution.
As per usual, the cryptocurrency industry wants to have its cake and eat it, too. It wants your money to drive up token prices, and it wants to be taken seriously as an alternative financial system, but it doesn’t want to abide by the rules and regulations that keep everyone safe and which make it difficult for criminals to launder their ill-gotten gains. Until it drops this stance and embraces reasonable regulation and legal oversight, the cryptocurrency industry will remain an ideologically-driven sideshow operating at a fraction of its potential.
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