Sanctions Compliance For Transactions in Fiat And Cryptocurrencies Are The Same: Expert Take

Expert Takes cover everything from Blockchain technology and ICO funding to taxation, regulation and cryptocurrency adoption by different sectors of the economy.

Cryptocurrency and its underlying Blockchain technology has captured widespread public investor interest including those who use them to evade international sanctions.

Up until March 19, 2018, those individuals and enterprises that purchased "Privacy coin" Zcash in Venezuela, as an optional intermediate step to converting bolivars into US dollars; or those who bought Venezuela's national cryptocurrency "Petro" with fiat currencies Turkish liras, Chinese yuan, Russian rubles, the euro or with cryptocurrencies Bitcoin, Ethereum, and NEM - were not subject to "US sanctions".

2018 was a watershed moment, not only for Hashemi Nejad who is facing up to 125 years in jail for US sanction violations; but also for the illicit use of cryptocurrencies.

Under OFAC's newly issued cryptocurrency guidance, US persons will have the same sanctions compliance obligations regardless of whether transactions involve fiat currencies or cryptocurrencies.

Sanctions violations involving cryptocurrencies are expected to result in enforcement actions that are similar to those imposed on persons that use fiat currencies.

Sanctioned nations like Iran, similar to Venezuela, are also contemplating issuing national and even multi-national cryptocurrencies.

Undoubtedly, the OFAC's new cryptocurrency rules represent another step in the march towards fully regulating cryptocurrency operations.

Cryptocurrencies are being brought under existing US regulatory schemes.

With the US government's stated commitment to enforcement of economic sanctions measures and the rapidly evolving nature of cryptocurrency markets and technologies, investigations may follow from OFAC's recent guidance.