Christopher Wray, the director of the Federal Bureau of Investigation, said that fiat was a more likely avenue for Russia to explore in circumventing sanctions, given the United States’ ability to block efforts using crypto.
In a Thursday hearing of the Senate Select Committee on Intelligence, New Mexico Senator Martin Heinrich asked the FBI director if Russia might respond to the economic impact of the United States banning imports of the country’s oil and gas by using reserves of gold, China’s currency or cryptocurrency. Director Wray said the FBI and its partners had "built up significant expertise" on digital assets, citing the department’s recent work in seizing large amounts of tokens as evidence there were vulnerabilities in using crypto to get around sanctions.
“The Russians' ability to circumvent the sanctions with cryptocurrency is probably highly overestimated on the part of maybe them and others,” said Wray. “We are, as a community and with our partners overseas, far more effective on that than I think that sometimes they appreciate and there's a lot of expertise in terms of tools and strategies to help block that kind of effort. Ultimately, what they really need to do is get access to some form of fiat currency, which becomes more challenging.”
Director of National Intelligence Avril Haines added that Russian President Vladimir Putin had likely anticipated sanctions from his actions against Ukraine and built up a reserve fund to lessen the economic impact. However, she said the U.S. Treasury Department and other foreign governments acting to sanction Russia had made it difficult to access the funds.
Following Russia’s military actions on Feb. 24, the United States and governments across the European Union announced sanctions aimed at financially harming the country. Many agencies and departments, including the U.S. Financial Crimes Enforcement Network and European Commission, said they would be looking at the possibility of Russia using digital currency to evade sanctions. U.S. President Joe Biden also signed an executive order on Wednesday aimed at creating a regulatory framework for crypto that mentioned risks of circumventing sanctions.