As an analogy they can't exactly sanction cash, either (eg. if Putin has US$10M in a suitcase and hands it to Kotagiri in exchange for widgets), so the concept should be tractable to at least some lawmakers.
They can say that no exchange is permitted exchange money for any wallet that accepts transactions from sanctioned entities.
Similarly, they can put sanctions on operators in other countries - if you run an exchange that provides real money in exchange for tainted currency, then maybe your own wallets end up in the “us exchanges cannot convert to real money” bucket.
So I think she does understand you can’t directly stop the transactions, but as with money laundering through crypto I suspect she knows how to make life much harder for people who facilitate it.
Have you ever watched congressional hearings? Many lawmakers seem to struggle with technical concepts way simpler than an immutable distributed ledger.
Yes I do think she understand, and yes, many don’t.
But even if they don’t understand, they generally understand how to manage laundering: yiu require proof that assets come from a source that isn’t illegal.
This has nothing to do with immutability (and in fact is aided by it): if a US exchange has data that suggests an illegal source that triggers money laundering work - which involves providing evidence of the legitimate source. Similar laws exist in most countries at this point.
You can’t get around this by using a foreign exchange either, because bringing the money into you country of residence also likely runs into laundering checks.
So even if they don’t understand immutability (which I suspect is not going to be the case) or whatever magic feature crypto is ostensibly offering, they do understand anti-laundering tools, and those are increasingly effective now that banks have actually started receiving penalties for violating anti-laundering laws.
I suppose taken to the extreme they could try to control which transactions miners who are subject to US law or influence accept, which would be an interesting experiment likely doomed to fail. But they don't really need to.
From what I can tell the immediate concern is about strengthening guidance and making sure Exchanges (and other entities dealing in crypto) enforce OFAC blacklists, etc. The volume of real world trade settled in cryptocurrency is still so low the article suggests it wouldn't have much impact at scale (per Carol House, the director of cybersecurity for the National Security Council "The scale that the Russian state would need to successfully circumvent all U.S. and partners’ financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state").
More likely her comments are intended to paint the crisis into a narrative Warren and like-minded legislators want to construct around crypto in advance of debate that will occur after the upcoming Biden announcement [1] and moreso once the agencies he will task to examine it report back (most of whom I anticipate will come back with fairly crypto-unfriendly stances).
Yeah, I'm not denying they have tons of secondary ways to sanction crypto. On the other hand, I think a state level actor could figure out ways around most of them.
I think you are definitely correct that these is part of larger posturing.
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[ 201 ms ] story [ 261 ms ] threadSimilarly, they can put sanctions on operators in other countries - if you run an exchange that provides real money in exchange for tainted currency, then maybe your own wallets end up in the “us exchanges cannot convert to real money” bucket.
So I think she does understand you can’t directly stop the transactions, but as with money laundering through crypto I suspect she knows how to make life much harder for people who facilitate it.
But even if they don’t understand, they generally understand how to manage laundering: yiu require proof that assets come from a source that isn’t illegal.
This has nothing to do with immutability (and in fact is aided by it): if a US exchange has data that suggests an illegal source that triggers money laundering work - which involves providing evidence of the legitimate source. Similar laws exist in most countries at this point.
You can’t get around this by using a foreign exchange either, because bringing the money into you country of residence also likely runs into laundering checks.
So even if they don’t understand immutability (which I suspect is not going to be the case) or whatever magic feature crypto is ostensibly offering, they do understand anti-laundering tools, and those are increasingly effective now that banks have actually started receiving penalties for violating anti-laundering laws.
From what I can tell the immediate concern is about strengthening guidance and making sure Exchanges (and other entities dealing in crypto) enforce OFAC blacklists, etc. The volume of real world trade settled in cryptocurrency is still so low the article suggests it wouldn't have much impact at scale (per Carol House, the director of cybersecurity for the National Security Council "The scale that the Russian state would need to successfully circumvent all U.S. and partners’ financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state").
More likely her comments are intended to paint the crisis into a narrative Warren and like-minded legislators want to construct around crypto in advance of debate that will occur after the upcoming Biden announcement [1] and moreso once the agencies he will task to examine it report back (most of whom I anticipate will come back with fairly crypto-unfriendly stances).
[1] https://ca.finance.yahoo.com/news/biden-order-on-crypto-over...
I think you are definitely correct that these is part of larger posturing.