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IMF and U.S. Treasury Agree: Cryptocurrencies Don’t Allow the Circumvention of Sanctions

  • The major point of contention in recent weeks in political and financial circles of the United States has been cleared by both official bodies.
  • IMF director Georgieva Kristalina believes that, so far, there is no solid evidence to the contrary.
  • U.S. Treasury Secretary Janet Yellen believes that it is very difficult to evade Western sanctions imposed on Russia.

The managing director of the International Monetary Fund, Georgieva Kristalina, believes that there has been no compelling evidence of the use of cryptocurrencies by governments, companies, or individuals to massively evade international sanctions. 

The official agreed with the Secretary of the Treasury of the United States, Janet Yellen, on the impossibility of using digital money at a large scale to circumvent the sanctions imposed on Russia by the West for the invasion of Ukraine.

“There is no strong evidence that digital money can be used to circumvent sanctions. Why? Because the financial system still has an important role to play,” Georgieva said this week during a virtual conference between the IMF and the World Bank.

The director of the international credit organization specified that “the sanctions very clearly prevent the transactions.” However, she later clarified that, since the war began on February 24th, the IMF has been closely following the case and monitoring compliance with Western sanctions on Russia.

Ukraine Has Received Help in the Form of Cryptocurrencies

The director went on to outline that the Ukrainian authorities “were very interested in digital currencies before the war. So they did a lot of work." This allowed them to receive help “at a low cost, quickly”, thereby reaching the people who needed it, added Georgieva.

However, she underlined that the aid received in the form of cryptocurrencies (approximately $100 million USD) represents only a small portion of the overall contributions made by Western countries to support the besieged country.

In her remarks, Georgieva also mentioned that Russia is “moving towards a digital central bank currency” or CBDC. As are China, the European Union, and the United States.

On the Flipside

  • The alleged use of cryptocurrencies to evade sanctions has been a recurring topic of discussion in recent weeks.
  • U.S. politicians and financial analysts have been concerned by whether the Kremlin has actually been able to get around Western sanctions by using digital money.

 

U.S. Treasury Secretary Janet Yellen has been skeptical on this point. "It's not that that sector is completely one where things can be evaded," she said in early March.

A month later, during a hearing of the House Financial Services Committee, she noted that, although "it is a channel we're worried about, we haven't seen significant evasion through crypto so far."

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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