US Treasury Secretary Janet Yellen made these remarks while testifying before the US House Financial Services Committee on Wednesday.
Since Russia’s invasion of Ukraine, sanctions have severely strained the country’s finances and depleted foreign reserves. That has prompted speculation that Russia might turn to cryptocurrencies to try to bypass restrictions.
Major cryptocurrency exchanges such as Coinbase and Kraken have previously argued that it is unlikely Russia will use crypto on a meaningful scale for sanctions evasion.
While US officials have warned exchanges not to facilitate suspicious transactions that could aid Russia, experts generally conclude that cryptocurrency is an unlikely option for large-scale sanctions evasion.
No “significant” crypto use for sanctions evasion
Treasury Secretary Janet Yellen reinforced that view during her appearance before the House Financial Services Committee on Wednesday.
“We are aware of the possibility, clearly, that crypto could be used as a tool to evade sanctions and we are carefully monitoring to make sure that doesn’t occur,” Yellen said.
She told lawmakers that US authorities have the ability to detect any large-scale crypto transactions linked to Russia and are actively monitoring the situation. Her testimony indicated there has been no evidence of “significant” use of crypto by Russia to evade sanctions.
“We haven’t seen significant evasion through crypto so far, but we’ll monitor carefully and use our authorities that we do have to make sure that this isn’t a major avenue for evasion,” the former chair of the US Federal Reserve said.
Earlier in March, Yellen acknowledged ongoing discussions about the possibility of crypto being used to skirt sanctions but stressed that federal agencies are watching the sector closely. She noted that many exchanges likely to be used for such purposes are subject to anti-money-laundering (AML) rules and must comply with sanctions regulations, making the crypto ecosystem an imperfect route for large-scale evasion.
Yellen’s assessment aligns with findings from blockchain analytics firms such as Chainalysis. In testimony to the US Senate Banking Committee in March, Chainalysis reported little on-chain evidence of substantial sanctions evasion via cryptocurrency.
Separately, on Wednesday US lawmakers introduced legislation that would require US-based exchanges to prohibit transactions by users located in Russia. The bill also proposes granting President Joe Biden authority to sanction foreign crypto exchanges judged to be assisting Russia in evading sanctions.