UK Agency Warns Crypto Exchanges to Report Any Sanctions’ Breaches

Crypto exchanges are now required to report and freeze accounts suspected of evading Russian sanctions or potentially face criminal charges.

By Emily Tonelli

Cryptocurrencies in the United Kingdom have come under fire from regulators. Image: Shutterstock

The United Kingdom Office of Financial Sanctions Implementation (OFSI) of Her Majesty’s Treasury ruled that cryptocurrency exchanges must report any suspected cryptocurrencies that may be used to evade Russian sanctions. 

In an August announcement, the OFSI stated that exchanges must report the suspected breach to the agency and freeze the assets or face criminal charges or financial penalties.

The sanctions agency added that “any other payment instruments” and assets that are “used to obtain funds, goods or services,” including cryptocurrencies, would fall under the definition of a sanction’s breach if used with such intent.

The UK Financial Conduct Authority (FCA) also said in March that financial firms and crypto exchanges “are expected to play their part in ensuring that sanctions are complied with,” while giving strict guidelines on how to best ensure that sanctions against Russia are upheld.

The first round of sanctions against Russia was announced on February 24 after Russia began its invasion of Ukraine. 

The OFSI said that entities involved with destabilizing or undermining the sovereignty of Ukraine and supporting the Russian government were subject to “freezing of funds and economic resources,” according to the updated financial sanctions notice.

Crypto industry responds to sanctions

When Ukrainian Vice Prime Minister Mykhailo Fedorov called for crypto exchanges to ban Russian users, the industry had mixed thoughts on how to respond.

In March, Binance told Reuters that it would not ban Russian citizens from the exchange, only those targeted by sanctions. 

Coinbase CEO Brian Armstrong tweeted that while ordinary Russians use “crypto as a lifeline,” if the United States calls for a ban, “we will, of course, follow those laws.”

Kraken’s CEO Jesse Powell, however, tweeted that Russian accounts cannot be frozen “without a legal requirement to do so.”

At the time of publication, no explicit bans for Russian crypto users have been ruled upon.