US Lawmakers press Biden administration on use of crypto to evade sanctions

By Hannah Lang

(Reuters) -Two lawmakers are pressing the Biden administration on its use of cryptocurrency to evade sanctions on Russia, Iran and North Korea, asking officials what additional authorities might be needed to prevent digital assets such as stablecoin Tether from being used by sanctioned entities in Russia and elsewhere.

WHY IT’S IMPORTANT

The letter, sent Sunday by U.S. Senators Elizabeth Warren, a Democrat, and Roger Marshall, a Republican, to officials including Treasury Secretary Janet Yellen and Defense Secretary Lloyd Austin, shows the growing scrutiny over how cryptocurrencies could be used to circumvent sanctions.

CONTEXT

Warren and Marshall expressed particular concern about the use of Tether, whose value is pegged to the U.S. dollar and is designed to maintain a stable value.

The Wall Street Journal reported earlier this month that Russian intermediaries were using Tether to evade Western sanctions to procure weapons parts for drones and other military equipment.

Reuters also reported this month that Venezuela’s state oil company PDVSA plans to use Tether for crude and fuel exports as the United States prepares to reimpose oil sanctions on the country.

KEY QUOTE

“The national security threat posed by cryptocurrency requires a proportionate response from our nation’s defense community,” Warren and Marshall wrote. said. They noted that although Tether’s preferred crypto trading platform, Garantex, was sanctioned, “it is not clear whether these actions stopped the flow of funds through the platform.”

REPLY

A Tether spokesperson said in a statement that every action taken with the cryptocurrency is online and traceable and “every asset can be seized and every criminal caught.”

“We’re working with law enforcement to do exactly that. Tether respects the (Office of Foreign Assets Control and Specially Designated Nationals) list and works with over 120 law enforcement agencies from 40 different countries, including the FBI, DOJ, and (U.S. Secret Service) is cooperating),” the spokesman said.

(Reporting by Hannah Lang in New York; Editing by Bill Berkrot)