Sen. Warren, D-Mass., said the Digital Asset Sanctions Compliance Enhancement Act of 2022 ensures that blacklisted Russian individuals and entities can't use cryptocurrencies to dodge sanctions. Warren announced the bill at a Thursday hearing on cryptocurrencies' uses in illicit finance.
Several key Democratic lawmakers joined Sen. Warren in introducing the bill, including Sen. Jack Reed, D-R.I., who heads the Senate Armed Services Committee; Sen. Mark Warner, D-Va., the chair of the Senate Intelligence Committee; and Sen. Jon Tester, D-Mont., chair of the Senate Defense Appropriations Subcommittee.
The bill would require President Biden to submit a report within 90 days identifying any "foreign person" who operates a digital asset trading platform or facilitates digital-asset transactions and "has significantly and materially assisted" anyone subjected to U.S. sanctions over Russia's invasion of Ukraine.
That assistance could include providing goods or services to support sanctioned people or entities, or "providing financial, material or technological support," per the bill text.
The report would also pinpoint any cryptocurrency entities owned or controlled by sanctioned Russian individuals.
The bill would allow the Biden administration to impose sanctions on such actors, prohibit their transactions with U.S. persons and block their assets, provided those property interests are in the U.S. or come under the control of a U.S. person.
The bill also bulks up transaction reporting by requiring U.S. persons to report digital-asset transactions via offshore accounts worth over $10,000 to the Financial Crimes Enforcement Network.
The bill received swift pushback from some cryptocurrency advocates such as policy group Coin Center, which argued that the bill could sweep up actors such as those who publish open-source software.
"The bill would place sweeping restrictions on persons who build, operate and use cryptocurrency networks even if they have no knowledge or intent to help anyone evade sanctions," Coin Center said in a statement. "It calls for sanctioning technologists and users merely for the act of publishing open source software or facilitating communication among network participants. This is unnecessary, overbroad and unconstitutional."
Coin Center also argued that statements from FBI Director Christopher Wray and Carol House, the director of cybersecurity for the National Security Council, rebut the concern that cryptocurrencies would facilitate large-scale sanctions evasion.
Wray told the Senate Intelligence Committee last week that Russia's ability to use digital assets to dodge sanctions is "probably highly overestimated," citing law enforcement's increased capabilities in the space. And House noted in a webinar Wednesday that Russian actors would have to move vast sums of money through the cryptocurrency ecosystem to successfully circumvent sanctions.
Some Republican lawmakers have also voiced opposition. Sen. Pat Toomey, R-Pa., said during Thursday's hearing that so far U.S. officials haven't found evidence of widespread Russian sanctions evasion via cryptocurrencies but that Ukraine has been using cryptocurrencies to raise tens of millions to support its military.
"There's simply no evidence of cryptocurrencies being used by Russia to evade sanctions in any significant way," Toomey said.
Sens. Warren, Warner and Reed previously expressed their concerns about cryptocurrency-aided sanctions evasion in a letter to the Treasury Department earlier this month.
Warren argued in a statement Thursday that the new bill would "strengthen our sanctions program and close off any avenues for Russian evasion."
"Putin and his cronies can move, store and hide their wealth using cryptocurrencies, potentially allowing them to evade the historic economic sanctions the U.S. and its partners across the world have levied in response to Russia's war against Ukraine," Warren said.
Sen. Reed added that the bill would "clarify Treasury's authorities and strengthen our sanctions on Putin and his enablers."
Representatives for Sen. Warren did not immediately respond to a request for additional comment on Thursday.
--Additional reporting by Al Barbarino. Editing by Rich Mills.
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