On March 17, the Senate Committee on Banking, Housing and Urban Affairs conducted a hearing titled, “Understanding the Role of Digital Assets in Illicit Finance,” which focused extensively on whether and how Russia could use digital assets to avoid sanctions, as well as how Ukraine is using cryptocurrency to support their fight against Russia.

In his opening statement, Chairman Sherrod Brown (D-OH) expressed concerns about offshore crypto companies not being subject to the U.S. laws, including the possibility that Russian actors can use cryptocurrency to avoid sanctions. Among other things, he noted that the Financial Crimes Enforcement Network (FinCEN) warned last week that Russian actors could use crypto to evade sanctions. In Senator Toomey’s (R-PA.) opening statement, he implored the committee to acknowledge the risks and benefits of crypto, emphasizing the need to protect technological innovation and individual freedom, while preventing criminal activity.

The panelists indicated that, although it is possible, there is no evidence at this time that Russia is systematically using cryptocurrency to evade sanctions. In that regard, one witness stated that the possibility exists for this illicit activity to be engaged in at scale, which is why the Department of Justice established Task Force KleptoCapture on March 2 to address this issue. Senator Elizabeth Warren (D-MA) stated in her questioning that “no one can argue that Russia can evade all sanctions by moving all of its assets into crypto. But for Putin’s oligarchs who are trying to hide … a billion or two of their wealth, crypto looks like a pretty good option.”

The witnesses providing testimony to the Senate committee were: Mr. Jonathan Levin, co-founder and chief strategy officer, Chainalysis, Inc.; Mr. Michael Mosier, former acting director, deputy director/digital innovation officer, Financial Crimes Enforcement Network (FinCEN); Mr. Michael Chobanian, founder of KUNA Exchange, president of Blockchain Association of Ukraine; and Mr. Shane Stansbury, Robinson Everett distinguished fellow in the Center for Law, Ethics, and National Security Senior Lecturing fellow, Duke University School of Law.