On March 11, Britain, Canada, France, Germany, Italy, Japan, and the United States (collectively, the G7) announced more sanctions against Russia, including first-time sanctions specific to virtual assets. The White House also announced that the Department of the Treasury would issue “new guidance [that] will continue to make clear that Treasury’s expansive actions against Russia require all U.S. persons to comply with sanctions regulations regardless of whether a transaction is denominated in traditional fiat currency or virtual currency.” Later that night, the Treasury Department issued another set of frequently asked question (FAQs), unequivocally stating that “Russia-related sanctions extend to virtual currency.”

The statement reiterated the G7’s “commit[ment] to maintaining the effectiveness of our restrictive measures, to cracking down on evasion and to closing loop-holes. Specifically, in addition to other measures planned to prevent evasion, we will ensure that the Russian state and elites, proxies and oligarchs cannot leverage digital assets as a means of evading or offsetting the impact of international sanctions, which will further limit their access to the global financial system. It is commonly understood that our current sanctions already cover crypto-assets. We commit to taking measures to better detect and interdict any illicit activity, and we will impose costs on illicit Russian actors using digital assets to enhance and transfer their wealth, consistent with our national processes.”

In the newest FAQs regarding the application of sanctions to virtual currency, the Treasury Department stated that “U.S. persons, including virtual currency exchanges, virtual wallet hosts, and other service providers, such as those that provide nested services for foreign exchanges, are generally prohibited from engaging in or facilitating prohibited transactions, including virtual currency transactions in which blocked persons have an interest. U.S. persons are further prohibited from engaging in or facilitating any transaction by a non-U.S. person that would be prohibited if performed by a U.S. person or within the United States, including virtual currency transactions involving the Central Bank of the Russian Federation, National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation. Among other activities, U.S. financial institutions are also generally prohibited from processing transactions, including virtual currency transactions, involving foreign financial institutions that are determined to be subject to the prohibitions of Directive 2 under Executive Order 14024, ‘Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions.'”