by Britt Mosman, David Mortlock, Elizabeth P. Gray, J. Christopher Giancarlo, and Samuel Hall
This is Part III of a three-part post. For Part I, providing an overview of sanctions compliance issues for the cryptocurrency industry, click here. For Part II, discussing blocked coins, blocked persons, and sanctioned regions, click here.
by Britt Mosman, David Mortlock, Elizabeth P. Gray, J. Christopher Giancarlo, and Samuel Hall
This is Part II of a three-part post. For Part I, providing an overview of sanctions compliance issues for the cryptocurrency industry, click here. Part III will discuss restricted transactions, blocking and rejecting crypto transactions, and compliance considerations.
Fortunately, there are some clear rules of the road. Certain cryptocurrencies have been blocked outright, and U.S. persons are prohibited from dealing in them or facilitating any dealings in them. In March 2018, President Trump issued Executive Order 13827 to prohibit U.S. persons from dealing in digital currencies that were issued by, for, or on behalf of the Government of Venezuela after January 9, 2018. The Order was a response to the Maduro regime’s launch of its own sovereign cryptocurrency, the “Petro,” in part to circumvent U.S. sanctions.
by Britt Mosman, David Mortlock, Elizabeth P. Gray, J. Christopher Giancarlo, and Samuel Hall
In recent years, the U.S. government has become increasingly focused on regulating the use of virtual currencies as a means of addressing a host of financial crimes and malign activities. As entities and individuals (“persons”) in this space find themselves subject to various, sometimes overlapping regulatory regimes, the compliance environment has become increasingly treacherous. One area of particular concern for those dealing with cryptocurrencies is U.S. economic sanctions, as is evidenced by the recent settlement between the Treasury Department’s Office of Foreign Assets Control (“OFAC”) and BitPay Inc. (“BitPay”), discussed below. Indeed, sanctions hold some of the most complicated compliance issues in one hand, and some of the largest penalties in the other, and they do not always—or perhaps rarely—fit cryptocurrency transactions neatly.
This post provides an overview of sanctions compliance principles for the cryptocurrency industry and discusses some key issues of which persons in the crypto space should be mindful, including:
As this post makes clear, some of the relevant prohibitions remain ambiguous and leave significant questions unanswered. In turn, some crypto transactions and related regulations may warrant license and guidance requests to OFAC or even legal challenges, including Administrative Procedure Act (“APA”) challenges, in U.S. courts to resolve those ambiguities. But at a minimum, there are certain basic steps that should be taken to comply with U.S. sanctions.