As many countries, entities and even individuals face international sanctions, the crypto industry seeks to find its place among increasing regulations.
Digital currencies have often been mentioned as an avenue for those subject to sanctions to divert them, such as in the recent case of Russia. In such instances, exchanges and other industry players need to understand where they stand compliance-wise.
Speaking to Cointelegraph’s managing editor Alex Cohen at the Israel Crypto Conference, Chainalysis head of sanctions Andrew Fierman said sanctions are nuanced depending on the many factors which surround the situation.
“When you’re looking at countries like Iran and North Korea, from a US perspective, crypto has in fact been comprehensively sanctioned.”
He said Russia is a bit of a “different story,” as there are entity-based sanctions like companies and individuals that have been sanctioned by the United States. Along with industry-based sanctions (energy, military, etc.), all of which create a cloudy nuance around the situation:
“That’s been one of the big challenges within the industry at large. Not only in crypto but traditional finance as well.”
However, Fierman said there are methods in which major industry players could spare the ecosystem from major headaches:
“Proactively sanctioning entities and actors that are operating in a damaging way to the ecosystem is an effective way to help stop them from interacting with the ecosystem at all.”
Fierman continued to say that there are a lot of opportunities to stop illicit activity in the industry if actors are working on the blockchain.
Fierman highlighted a few recent cases of compliance enforcement from governmental entities such as the Office of Foreign Assets Control (OFAC). One of which involved the centralized exchange Kraken, which was fined hundreds of thousands from OFAC, along with Bitfinex which received an even heftier fine:
“In both instances, these really show a path for entities in space to take the right approach.”
According to the head of sanctions, one of the big trends in the industry has been IP blocking and ongoing monitoring of IP activity. This doesn’t just account for the point of “know your customer” procedures to verify user identity but also where users log in to search for inconsistencies.
Forecasts predict crypto-related, cross-chain money laundering to reach $10 billion by 2025.