U.S. Treasury Secretary Janet Yellen told the House Financial Services Committee on Wednesday that her department has not seen significant use of cryptocurrencies to evade sanctions against Russian oligarchs and government agencies. During the committee's annual hearing on the state of the international financial system, Yellen was asked repeatedly about digital asset security.
"We are well aware that cryptocurrencies may be used as a tool to evade sanctions, and we are monitoring carefully to ensure that does not occur," Yellen said. "However, I would say we have a lot of authority in this space and are using it and will be using it."
Yellen assured the committee that it would be difficult to use cryptocurrencies to evade sanctions because blockchains are being "checked regularly" and large transactions are recorded. “[Crypto] exchanges are subject to AML/CFT [Anti-Money Laundering/Combating the Financing of Terrorism] regulations, so they are part of the financial system,” she said. “So far, we haven’t seen mass circumvention through cryptocurrencies.”
The U.S. Department of the Treasury’s Office of Foreign Assets Control announced Tuesday that it will impose sanctions on Moscow-based digital currency exchange Garantex for ignoring AML/CFT regulations and carrying out a ransomware attack on Russian darknet marketplace Hydra. The Treasury Department is one of several U.S. agencies working to sanction the groups.
Sanctions weren't the only crypto-related issue committee members considered. Rep. Bill Foster asked about digital identity verification. Yellen said her department "has a very broad interest in digital identity, in part because we administer public benefits (and) tax refunds," assuring the congressman, "We're fleshing out actions to advance that agenda." .”
Rep. Warren Davidson of Ohio expressed his concerns about securing self-custodial digital wallets, which he described as "self-custody of private property without an intermediary."
Yellen will speak on Thursday at the American University in Washington, D.C., about President Joe Biden's executive order on digital assets and the Treasury Department's handling of it.
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