Under the new guidelines, adopted in response to concerns that bitcoin and other crypto assets are being used to thwart sanctions imposed in response to Russia’s invasion of Ukraine, cryptocurrency exchanges must notify UK authorities of alleged sanctions violations.
On August 30, the official guidance was changed, and now “crypto assets” are defined as assets that must be frozen in the event of sanctions being applied to any individual or entity. Crypto assets, in addition to digital currencies such as bitcoin, ether and tether, may contain other hypothetically valuable digital assets such as non-fungible tokens.
Regulations set by the Financial Sanctions Enforcement Office of the Treasury provide for criminal liability for crypto exchanges if they do not disclose information about clients that are subject to sanctions.
According to the guidelines, crypto exchanges must act quickly if they suspect that one of their clients is subject to sanctions, or if they suspect a violation of sanctions, put them in the same category as real estate agents, accountants, lawyers and jewelers.
Financial sanctions against individuals and entities associated with the regime of Vladimir Putin have been one of the most visible British responses to the invasion of Ukraine.
Sanctions were imposed against oligarchs and their families who have direct shares in crypto assets. Among them is Vladimir Potanin, the former second richest man in Russia, who backed Atomyze, a Swiss blockchain company.
Said Gutseriev, the son of oligarch Mikhail, owned a stake in the Belarusian cryptocurrency exchange until August 2021, when he was sanctioned on the same day as Potanin in June. Oleg Deripaska, a steel magnate, once urged the Russian central bank to allow bitcoin as a payment method. There is no evidence that they used crypto assets to avoid fines.
Binance, the world’s largest cryptocurrency exchange by trading volume, announced in April that it had blocked the accounts of relatives of Russian politicians, including Polina Kovaleva, daughter-in-law of Foreign Minister Sergei Lavrov, and Elizaveta Peskova, Putin’s daughter. press secretary Dmitry Peskov. . The exchange has already downplayed concerns about the use of cryptocurrencies to avoid sanctions.
The use of cryptocurrencies to circumvent sanctions and transfer money around the world has already been banned in the UK under rules that apply to all “economic resources”. However, the adjustment highlights authorities’ concerns about relatively new ones that could be useful in avoiding fines as users do not transact through registered companies.