Jerome Powell, Chairman of Federal Reserve, testified before the House Financial Services Committee about the current state of the economy and the future direction of monetary policy. He said that the conflict with Ukraine “underscores” his advocacy for crypto regulation, given the many sanctions that were placed on Russia in the course of the conflict.
After his testimony on Wednesday Powell was asked if Russia could use cryptocurrency to circumvent the string of sanctions that were recently placed against the country.
After the US announced “special military operations” against Ukraine, Western countries have taken significant measures to harm Russia’s economy by waging a trade war. These include “export barriers on technology” between the US and Russia. They also include a huge cutoff of SWIFT-banking access to Russian banks.
Powell replied, “[The Ukraine-Russian conflict] has highlighted the need for Congressional actions on digital finance including cryptocurrencies.” We have a burgeoning industry with many parts, but there isn’t the right regulatory framework.
Because cryptocurrencies such as Bitcoin enable peer-to-peer, cross-border transactions it is difficult for governments enforce trade restrictions. Concerns are being raised by Western allies about Russians using them in conflict, including Christine Lagarde, President of the European Central Bank.
Powell also spoke out about how crypto could be used by terrorists and other nefarious entities, underscoring the need to have adequate regulation. Although he does not intend to ban cryptocurrency like China’s, Powell and lawmakers have long recognized the risks of money laundering from digital assets, especially stablecoins.
Exchanges: What Role Does It Play?
The exchanges are the main chokepoint for regulators to prevent or block crypto transactions.
Ukraine officials called for crypto exchanges blacklisting Russian addresses to help enforce sanctions. This was done to “sabotage ordinary user” However, Binance and Kraken aren’t on board due to the libertarian values cryptocurrencies are supposed represent.
Hillary Clinton, former first lady and US presidential hopeful, expressed dissatisfaction with their decision and showed dismissiveness towards their philosophy. She hopes that all parties will do their best to harm Russia’s economy in this moment.
However, cryptocurrencies are also proving to be beneficial for Ukrainians. Tens of millions of dollars have been sent to Ukraine through Bitcoin, Ethereum and other assets.
Marla Brooks – Financial Analysis
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