One of the first punitive measures leveled against Russia in response to the military invasion of Ukraine was the implementation of economic sanctions aimed at isolating the country from the international financial system. On March 12, Russian banks lost access to the international payments and messaging network SWIFT, and private sector payment companies, such as Visa (NYSE:V), PayPal (NASDAQ:PYPL) and Mastercard (NYSE:MA), were close behind. But while these highly regulated and publicly scrutinized organizations were quick to react to the crisis, concerns quickly mounted that the Russian state, as well as companies and oligarchs associated with it, could turn to digital currency exchanges as a backdoor to side-step sanctions.
In the United Kingdom, the Bank of England and Financial Conduct Authority asked crypto firms to enforce sanctions across their platforms, and central banks and regulators around the world have since joined this chorus of concern. Most recently, Japan announced it would be revising its Foreign Exchange and Foreign Trade Act. This aims to widen its breadth to apply to crypto assets, meaning exchanges will be required to assess whether their clients are Russian sanction targets.
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