European Central Bank President Calls for Urgent Crypto Regulation After Russian Sanctions

On Friday, European Central Bank (ECB) president Christine Lagarde exhorted lawmakers to quickly approve a regulatory framework on crypto to prevent Russia from skirting economic sanctions, according to Bloomberg.

The European parliament initially introduced draft legislation known as Markets in Crypto Assets (MiCA) in September 2020 to govern virtual asset regulation in the European Union. The legislation was up for a vote at the European Parliament on Monday, but it was delayed amid concerns that it might be perceived as a ban on proof-of-work technology. A new voting date has not yet been scheduled.

However, amid a raft of sanctions levied on Russia this week, the ECB president has pressed for the legislation to speed up, hinting that Russia might capitalize on cryptocurrency as a way to skirt sanctions: “Whenever there is a ban or prohibition or a mechanism in place to boycott or prohibit, there are always criminal ways that will try to circumvent the prohibition or the ban,” Lagarde said.

“It’s so critically important that MiCA is pushed through as quickly as possible, so we have a regulatory framework within which crypto assets can actually be caught,” she added.

The MiCa legislation would create “a regulatory framework for the crypto-assets market that supports innovation and draws on the potential of crypto-assets in a way that preserves financial stability and protects investors.”

Last fall, the U.S. Treasury Department cautioned that the impact of American sanctions could be weakened or threatened by cryptocurrencies.

Russian entities have garnered approximately $400 million in cryptocurrency from ransomware attacks in the last year, according to blockchain transaction analytics firm Chainalysis

Many rely on the dark web crypto marketplace known as Hydra, which makes it difficult for authorities to trace even crypto transactions on blockchain.

“The lessening of US sanctions power comes from a system where these nation-states are able to do transactions without going through the global banking system,” Yaya Fanusie of the Center for a New American Security told the New York Times.

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