Since March 1, the United States (US), the United Kingdom (UK), and the European Union (EU) have led a campaign to increase the application of sanctions and other restrictive measures against Russia that is unprecedented in its scope, complexity, and impact—which will continue to increase. While Congress has largely taken a back seat to the sanctions developments since late February, when the conflict began, it may soon initiate legislative action to include energy sanctions, expanded financial sanctions, and increased oversight.
The Biden Administration is close to negotiating the re-entry of the US into the Iran Nuclear agreement leading to a long-term confrontation with Congress, with sanctions relief at the epicenter.
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Senate Banking Committee Chair Sherrod Brown (D-OH) said he expects a Senate vote next week to confirm President Joe Biden’s Federal Reserve nominees, though the timing may be affected by GOP opposition to Lisa Cook, who would be the first Black woman on the Board of Governors.
Brown said he’s urging Republicans to agree to vote on all of the nominees in one day. That includes Cook, who Republicans unanimously opposed in committee and as a result faces a procedural hurdle before a confirmation vote. She can advance and be confirmed if Democrats stay unified in the 50-50 Senate, with Vice President Kamala Harris able to provide the tie-breaking vote.
The Senate also has to vote on confirming Biden’s nominations of Jerome Powell to a second term as Fed chair, Lael Brainard as vice chair, and Philip Jefferson as a governor. Powell and Jefferson have broad bipartisan support, while Brainard won four GOP votes in committee.
Federal Reserve Chair Jerome Powell outlined four qualities a hypothetical digital currency in the U.S. must have while adding that no final decision has been made on whether to proceed with creating one. Powell said a central bank digital currency would need to ensure user privacy; it would need to be “identity verifiable,” similar to the way U.S. bank accounts are identifiable to prevent money laundering; it would need to be “intermediated,” or widely embraced by the current banking system; and serve as a widely accepted means of payment.
Appearing alongside Sen. Lummis (R-WY), at a Politico event, Senator Gillibrand (D-NY) announced that the two Senators were at “the beginning of the process of writing legislation” regarding digital assets. Senator Gillibrand said that they will continue working together and it will hopefully be introduced in a few weeks. It is something Senator Gillibrand said could hopefully get a vote by the end of the year, but it will need to go through regular order. The two also agreed that the CFTC will need more resources to regulate the crypto market.
Europe’s proposed artificial intelligence (AI) rules should try to benefit from the technology instead of hindering it. “There should be a general positive approach towards artificial intelligence,” European Parliament member Svenja Hahn said in an interview.
The U.K. Payment System Regulator (PSR), a fundamental piece of the regulatory payment landscape in the U.K., recently outlined its priorities, which include monitoring the development of a New Payment Architecture (NPA), continuing looking into card payments, and exploring the role of Big Tech and data in payments.
The House Financial Services Committee majority is conducting a survey of financial (and some other) trade associations “requesting detailed information on the significant actions that America’s financial institutions and businesses have taken to end their relationships and engagements in Russia, with the Kremlin, and with businesses that support the Russian government.” A full list of the trades contacted can be found here.
Under Secretary of the Treasury for Domestic Finance Nellie Liang gave remarks to the National Association for Business Economics. While the remarks were the first from a senior Treasury official post-EO, they mostly reiterated what Ms. Liang and other officials have said during testimonies on Capitol Hill.
Senator Elizabeth Warren (D-MA), Senate Armed Services Committee Chairman Jack Reed (D-RI), Senate Intelligence Committee Chairman Mark Warner (D-VA), Senate Foreign Relations Committee Chairman Robert Menendez (D-NJ), Senate Defense Appropriations Subcommittee Chair Jon Tester (D-MT) and others introduced the Digital Asset Sanctions Compliance Enhancement Act to “ensure that Vladimir Putin and Russian elites don’t use digital assets to undermine the international community’s economic sanctions against Russia following its invasion of Ukraine.”
The bill comes amid concerns from some Senators that Russian actors may try to evade economic sanctions by using digital currencies. Countries hit hard by sanctions, including North Korea and Iran, have been previously found to use cryptocurrency to curb the effects of economic sanctions.
This legislation is cosponsored by Senators Tammy Duckworth (D-IL), Debbie Stabenow (D-MI), Raphael Warnock (D-GA), Chris Van Hollen (D-MD), Tina Smith (D-MN), and Catherine Cortez Masto (D-NV).).
“Putin and his cronies can move, store, and hide their wealth using cryptocurrencies, potentially allowing them to evade the historic economic sanctions the U.S. and its partners across the world have levied in response to Russia’s war against Ukraine. I’m glad to introduce the Digital Asset Sanctions Compliance Enhancement Act with my colleagues to strengthen our sanctions program and close off any avenues for Russian evasion,” said Senator Warren.
“The U.S. and its allies have imposed some of the strongest sanctions in history to try to stop Putin and his cronies from waging war on Ukraine. A sanctions system without strong authorities to limit evasion using digital assets is like having a security system but leaving the front door open. This bill would clarify Treasury’s authorities and strengthen our sanctions on Putin and his enablers,” said Senator Reed.
Importantly, Administration officials including the Director of the FBI and staff at FinCen have expressed doubt that sanctioned entities – either entities or oligarchs – can use digital assets (and distributed ledger technology) to avoid sanctions at scale. Equally notable, no Republicans are currently cosponsors of the legislation.
Representative Brad Sherman (D-CA-30) will be introducing a companion bill in the House.
“I look forward to joining with my colleagues to make sure that one of the tools available to the administration is the ability to tell crypto exchanges if they’re doing business in the United States, they can’t do business with Russia-based crypto wallets until this crisis is over,” said Sherman.