The House Financial Services Committee held a hearing on “Monetary Policy and the State of the Economy.” There, several lawmakers asked the current chair of the Federal Reserve, Jerome Powell, about the possible regulation of cryptocurrencies on the understanding that economic sanctions against Russia could be circumvented through investments in the crypto world.
Specifically, California representative Juan Vargas asked Powell whether cryptocurrencies could be an “way out” for Russia to pursue financial transactions in the wake of the United States and the European Union excluding the country from the SWIFT payments network, which allows individuals and businesses to accept or send international money via electronic or credit card payments. The chairman said the situation with Russia “underscores the need for really congressional action on digital finance, including cryptocurrencies.”
He expanded: “There isn’t in place the kind of regulation framework that needs to be there. […] What’s needed is a framework, in particular ways to prevent these unbacked cryptocurrencies from serving as a vehicle for terrorist financing and just general criminal behavior, tax avoidance and the like.”
For his part, Connecticut Representative Jim Himes said it was time for all of them to take the lead in creating a regulatory environment where they, and not the despots, terrorists and money launderers of the world, benefit from the emergence of cryptocurrency, including a central bank digital currency.
Meanwhile, Senate Banking Committee members Elizabeth Warren, Mark Warner, Sherrod Brown and Jack Reed wrote a letter to Treasury Secretary Janet Yellen expressing concern that Russia and other countries may use cryptocurrencies to “hide cross-border transactions for nefarious purposes.”
“There are growing concerns that Russia may use cryptocurrencies to circumvent the broad new sanctions it faces from the Biden administration and foreign governments in response to its invasion of Ukraine,” said the four senators.
“This could include the use of dark web marketplaces that are powered by cryptocurrencies to move funds and conduct transactions; the use of crypto wallets and mixing services that allow sanctioned entities to transfer and hide their wealth; deployment of a digital ruble that would allow Russia to conduct foreign trade without converting their currency into dollars.”
They added: “This could include the use of dark web marketplaces that are powered by cryptocurrencies to move funds and conduct transactions; the use of cryptocurrency wallets and mixing services that allow sanctioned entities to transfer and hide their wealth; the deployment of a digital rouble that would allow Russia to conduct foreign trade without converting its currency into dollars.”