According to new regulations introduced in response to fears that bitcoin and other crypto assets are being used to get over sanctions put in place in response to Russia’s invasion of Ukraine, cryptocurrency exchanges must notify suspected sanctions breaches to UK authorities.
On August 30, official guidelines were revised to specifically include “cryptoassets” among the things that must be blocked if sanctions are placed on a person or business. Cryptoassets could include non-fungible tokens in addition to digital currencies like bitcoin, ether, and tether as well as other potentially valuable digital assets.
According to the regulations established by the Treasury’s Office of Financial Penalties Implementation, cryptocurrency exchanges will be breaking the law if they fail to report customers who are subject to sanctions.
The regulations say that cryptocurrency exchanges have the same responsibility as professionals like estate agents, accountants, lawyers, and jewellers to take appropriate action if they suspect one of their customers is subject to penalties or if they suspect a breach of sanctions.
One of the UK’s most notable responses to the invasion of Ukraine has been the imposition of financial penalties on individuals and businesses with ties to the Vladimir Putin administration.
The stepdaughter of the foreign minister, Sergei Lavrov, Polina Kovaleva, and the daughter of Putin’s spokesman, Elizaveta Peskova, had their accounts suspended, according to Binance, the largest cryptocurrency exchange in the world by trading volume. The exchange has allayed concerns that cryptocurrency may be used to circumvent sanctions.
The UK already has laws against using cryptocurrencies to evade sanctions and transfer money abroad. These laws cover all “economic resources.” The modification highlights the authorities’ worry about the relatively new assets, which may be helpful for avoiding sanctions because users do not rely on regulated firms to conduct transactions.
Crypto Assets are subject to sanctions regulations, according to a joint statement from UK financial regulators released in March. Large cryptocurrency transactions with Russia were prohibited by the EU in April.
The potential of crypto assets being used to violate or evade financial sanctions must be addressed, according to a Treasury official. These new rules will apply to businesses that either track their holdings of cryptoassets or facilitate their transfer, making them the most likely sources of pertinent data.