Key Insights:

• On Wednesday, the U.S. government announced sanctions on crypto mining firms for the first time.

• The latest sanctions come following the IMF highlighting the possible evasion of sanctions through crypto mining.

• Bitcoin (BTC) showed little reaction despite the increased level of scrutiny.

Government and regulatory scrutiny over cryptos have plagued the crypto markets since December.

The war in Ukraine and punitive sanctions on Russia have intensified the level of scrutiny. Governments are monitoring crypto movements and investigating any suspicious activity.

This week, there has been plenty of chatter on cyberattacks, with both Russia and North Korea center stage.

On Tuesday, the IMF also raised its concerns over cryptos and sanction evasion in the IMF Global Financial Stability Report.

U.S. Treasury Sanctions Crypto Miners Evading Sanctions on Russia

On Wednesday, the U.S. Treasury issued a statement on fresh sanctions targeting entities facilitating Russia to evade sanctions.

Titled ‘U.S. Treasury Designates Facilitators of Russian Sanctions Evasion,’ the Treasury stated,

“This is the first time the Treasury has designated a virtual currency mining company.”

The Under Secretary for Terrorism and Financial Intelligence, Brian E. Nelson, said,

“Treasury can and will target those who evade, attempt to evade, or aid the evasion of U.S. sanctions against Russia, as they are helping Putin’s brutal war of choice.”

Nelson went on to say,

“The United States will work to ensure that the sanctions we have imposed, in close coordination with our international partners, degrade the Kremlin’s ability to project power and fund its invasion.”

The Treasury stated that

“By operating vast server farms that sell virtual mining capacity internationally, these companies help monetize its natural resources. Russia has a comparative advantage in crypto mining due to energy resources and a cold climate. However, mining companies rely on imported computer equipment and fiat payments, which makes them vulnerable to sanctions.”

As a result of the focus on virtual currency mining companies,

“OFAC designated this holding company, Bitriver AG, pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.”

Additionally, OFAC designated Russia-based subsidiaries of Bitriver AG.

The U.S. government’s targeting of virtual currency mining companies coincided with the IMF Financial Stability Report.

IMF Highlights Risk of Cryptoization and Sanction Evasion

On Tuesday, FX Empire reported on the IMF’s focus on cryptos in its quarter Global Financial Stability Report.