Yellen: We Are Very Attentive to the Use of Crypto to Evade Sanctions

U.S. Treasury Secretary Janet Yellen testified before the House Financial Services Committee last week. During the hearing, Congressman Brad Sherman

U.S. Treasury Secretary Janet Yellen has addressed concerns about Russia using cryptocurrency to evade sanctions. During her testimony before the House Financial Services Committee, Yellen acknowledged the potential threat, noting that while it may not be a significant issue now, it could become more concerning as sanctions intensify.

“We are very attentive to the use of cryptocurrencies and stablecoins. We don’t think it’s a very substantial thing that Russia is doing but as our sanctions bite more and more, it becomes a concern,” Yellen said in response to questions from Congressman Brad Sherman (D-CA) about Russia’s use of cryptocurrency and stablecoins to evade Western sanctions.

Sherman pointed out that the Russian central bank has urged the use of crypto to evade Western sanctions, adding that a stablecoin “offers no particular advantage in that it’s stable, you can’t make money by holding it, and it usually doesn’t pay interest.”

“Its sole advantage is evading our sanctions and other laws, including tax laws, and I hope that in enforcing our sanctions on Russia, you will not facilitate that by facilitating stablecoin,” the congressman said.

Yellen’s remarks come amid concerns that Russia could be using cryptocurrency to counter the impact of Western sanctions imposed over the Ukraine conflict. The Bank of Russia recently advised businesses to use cryptocurrencies and digital assets to mitigate the impact of the sanctions.

Russian Central Bank Governor Elvira Nabiullina acknowledged that payment issues are critical for the Russian economy and highlighted the role of new financial technologies in creating unprecedented solutions.

“New financial technology creates opportunities for schemes which did not exist before. This is why we softened our stance on the use of cryptocurrencies in international payments, allowing the use of digital assets in such payments,” Nabiullina said.

Russia’s trade relationships with China, India, the United Arab Emirates (UAE), and Turkey have faced difficulties due to sanctions targeting major Russian financial entities.