US Lawmakers And Fed Call For Crypto Regulation Amid Russia Sanctions

Jerome Powell, the chair of the Federal Reserve (Fed) made a rare commentary on legislation in front of the congress today, talking about Russia and using crypto to avoid sanctions.

Powell testified on monetary policy before the House Financial Services Committee, featuring a shift in priorities given Russia / Ukraine situation and the following surge in financial sanctions. 

The Fed chair has previously insisted on the Fed’s limited role, emphasizing twin priorities of maximum employment and stable prices across his term. To a question about sanctions, he was cautious about overemphasizing the Fed’s role.

“We provide technical support. We implement those sanctions, and we make sure that banks obey them. But we’re not the decision-makers on those things. These are decisions that are made at the level of the elected government, not at the level of the Fed.”

Representative Juan Vargas (D-CA) raised concerns about using crypto to evade sanctions evasion, to which Powell responded with a legislative opinion: 

“It underscores the need for congressional action on digital finance, including cryptocurrencies. Ultimately what’s needed is a framework in particular, ways to prevent these unbacked cryptocurrencies from serving as a vehicle for terrorist finance and general criminal behavior — tax avoidance and the like. That’s what I would say, but I don’t really know the extent to which it’s happening, but you read about it in the paper.”

The West and its allies have effectively cut off Russia’s access to the global financial system, with the value of the ruble and Russian stocks consequently plummeting in the past ten days. Crypto’s role in potentially bypassing sanctions has drawn attention at the highest levels, with Ukraine planning legal demands for crypto exchanges to cut service for Russian citizen, not just sanctioned entities.