ECB Seeks Hastened Crypto Regulation to Stop Russia From Evading Sanctions

European Central Bank (ECB) President Christine Lagarde has now called on the European Union to hasten MiCA regulations in  a bid to prevent Russia from evading new sanctions.

She made the statement during a press briefing when asked if Russia could use cryptocurrency to evade sanctions.

“There are always criminal ways to try to circumvent a prohibition, which is why it’s so critically important that MiCA is pushed through as quickly as possible so we have a regulatory framework,” she said.

Introduced two years ago by the EU, the Markets for Crypto-Assets, or MiCA, is a regulation that guilds distributed ledger technology (DLT) and digital asset operations while protecting investors against risk. The regulation is yet to be adopted as a law.

In addition, six European nations, including Germany, Austria, Italy, Luxembourg, Spain and the Netherlands, are looking to bring crypto firms under the supervision of the EU’s financial crime watchdog to prevent financial crimes like the money laundering act and terrorist financing. The new regulatory body will start operating in 2024.

Will Russia Use Crypto to Evade Sanctions?

In the early hours of Thursday, Russia launched a full-scale invasion of Ukraine, targeting the country’s capital, Kyiv, and several other major cities. Many countries all over the world have disapproved of the Russian attack on Ukraine, which was approved by President Vladimir Putin.

The move by Russia has received stern reactions from European Union (EU) leaders and other global leaders who have described it as a “senseless aggression.”

Provoked by Russia’s continued attacks on Ukraine, the EU has joined other global leaders like Britain and the US in imposing sanctions on Russia, thereby restricting Russian access to E.U. financial and capital markets.

In the aftermath of the sanctions, media reports suggest that Russia could use cryptocurrency to evade sanctions due to the decentralized nature of the asset class, it makes it able to bypass restrictions imposed by any government or financial institutions.

It was only late last month that President Putin called on the government and Bank of Russia (BoR) to reach a consensus to set up regulations for crypto, citing the advantages that the asset class provides. Hence, the European Central Bank seems concerned that Russia may turn to crypto, although only time will tell if that happens.

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