Congress wants to be notified of all crypto reward payments by DOS
As the US grows increasingly concerned about evasion of sanctions via cryptocurrency, a new bill requires Congress to be notified of all crypto aid given to Ukraine.
The bill, which the House of Representatives considered on September 19, has been titled the “Russia Cryptocurrency Transparency Act”.
The bill calls for the appointment of a Director of Digital Currency Security at the Office of Economic Sanctions Policy and Implementation of the DOS. The director will assess how cryptocurrencies impact the US sanctions regime and develop and implement crypto-resilient sanctions policies.
The bill requires the Secretary of State to notify the Foreign Affairs Committee and the Foreign Relations Committee at least 15 days before the payment of any crypto rewards. The bill refers to the Department of State’s (DOS) Rewards for Justice program, which offers money for information that helps prevent acts of international terrorism.
The bill asks DOS to submit a report explaining why it chose to pay out rewards in cryptocurrency. It also requires the report to include a list of all crypto rewards already paid by DOS. The report should include evidence explaining why crypto payments make whistleblowers more likely to come forward than US dollars, according to the bill.
In addition, the report directs the Secretary of State to determine how the State Department’s use of crypto affects the dollar’s status as a global reserve currency and whether it could lead to more funds being used for illegal activities.
The bill also calls for a report on the role of crypto and blockchain in providing humanitarian aid to Ukraine and promoting economic development. According to the bill, the report should include how blockchain and crypto can help provide support or resettlement of Ukrainian refugees and increase efficiency, accountability and transparency in aid to Ukrainians.
The fear of evasion of Russian sanctions
In addition, the bill requires the Secretary of State, in consultation with the Secretary of the Treasury, to submit a report on the extent to which digital currencies may affect the effectiveness and enforcement of US sanctions against the Russian Federation.
According to the bill, the report must include descriptions of the Russian Federation’s efforts to use crypto and Web 3.0 tools to evade sanctions. It should also include an assessment of how the use or adoption of crypto could undermine national security, sanctions and anti-money laundering measures.
Furthermore, the bill’s text states that the report should also include actions taken by the United States to work with the private sector to combat sanctions evasion.
The US imposed sanctions against Russian targets in late February 2022, a few days after Russia attacked Ukraine. President Joe Biden mentioned the threat of Russians using crypto to avoid sanctions in his executive order.
Lawmakers specifically asked crypto exchanges to comply with the sanctions and cut service to all sanctioned targets. While some crypto exchanges were initially hesitant, they eventually relented. But a Chainalysis investigation showed that there is a lack of evidence to suggest that crypto is being used to avoid sanctions.
