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NEW YORK, NY – 
(NewMediaWire) – December 23, 2022 – (Ny Press Wire) – The topic of sanctions is one
of the most keenly discussed in 2022, expert Maxim
Kurbnagaleev believes. Restrictive measures may be imposed on companies, sectors
of the economy or an entire country by other countries, law enforcement
agencies, as well as international authorized organizations.
Economic sanctions include
measures (suspension or restriction of activities, fines) that are imposed on
the company because of violation of certain rules — local laws, international
standards or other normative legal acts regulating this type of activity.
For instance, the Central
Bank of a country may revoke the license of a commercial bank, or a plant may
receive a fine from a supervisory organization for improper disposal of waste.
Such cases are described by a
set of rules, violation of which leads to punishment. But what if there are no
generally accepted rules? Does the activity become illegal in this case, or is
it simply not regulated? Participants in cryptocurrency transactions from
exchanges to ordinary users ask these questions. Maxim Kurbangaleev told us
about the problems in the cryptocurrency sphere and ways to solve them.
How do sanctions work? – Maxim Kurbangaleev
Cryptocurrency, as an
alternative payment method, appeared relatively recently — in 2008. At first,
regulators did not pay attention to this activity, but with the rapid growth in
the number of users, they had to change this position.
The principle of operation —
blockchain technology — involves recording in blocks all operations ever
carried out with a specific unit of cryptocurrency, as well as further copying
all available information into new blocks. For security purposes, all this information
is encrypted, so market participants cannot scan the entire blockchain without
special tools. Previously, such tools did not exist, which is why
cryptocurrency was an attractive means for money laundering.
When the volume of
transactions became so noticeable to attract the attention of the regulator,
blockchain analysis programs appeared (for example, Chainalysis, Coinpath,
Etherscan, etc.). They check, systematize and visually present data in the
cryptographic chain, so can get information about the participants of
transactions. Thanks to these tools, it became possible to track transactions
related to illegal activities and blocking of suspicious companies began.
Maxim Kurbangaleev: SUEX is the first crypto exchange to be sanctioned
The first case of imposing
sanctions on a cryptocurrency exchange occurred in September 2021, when the
Czech company SUEX was included in the sanctions list of the US Office of
Foreign Assets Control (OFAC SDN List). According to the US Treasury
Department, SUEX was engaged in laundering money received from fraudulent
schemes.
It is also known that the
blockchain scanner Chainalysis took part in the investigation of this case. It
would seem that a solution to combat illegal crypto operations has been found,
but our invited expert Maxim Kurbangaleev believes otherwise. According to him,
this approach also affects those who have never participated in illegal
schemes:
“Imagine that an
ordinary user wants to buy cryptocurrency. He opens an electronic wallet, finds
an exchange and purchases cryptocurrency, which goes to his account. Suddenly
it turns out that 50 blocks ago, a specific unit of crypto in the user’s wallet
had been involved in some illegal pyramid, which law enforcement agencies found
and applied the appropriate punishment to it. Because of this record in the
block, the entire user’s wallet receives a label, which, fortunately, does not
block all the funds, but significantly limits the range of available actions.
Is it fair? I’m sure it is not. Or an exchange platform gets on the sanctions
list, and suddenly the entire crypto, which has transactions from this exchange
in the blockchain, also becomes sanctioned. Moreover, users cannot cancel such
a transfer in order to somehow protect themselves,” the expert says.
Unregulated activity: outlawed or illegal? – Maxim Kurbangaleev
Cryptocurrency activity has
not been legalized in all countries of the world so far. Legalization means
that companies have a legal framework based on which they conduct business.
But, as a rule, crypto companies operate all over the world, so it is important
for them to comply with the laws of not only those jurisdictions where they are
registered, but also those where they serve their customers.
At this point business faces
another problem — the lack of a common legal regime. In some countries
cryptocurrency is a legal means of payment on a par with the national currency,
in other countries it can be used only by individuals, and elsewhere it is completely ignored by
local legislation.
Maxim Kurbangaleev: “In
the market there is no general understanding of how to treat cryptocurrency
transactions, how to check them, whether the analysis will be enough for an
operation in another country, and whether the transaction will not fall into
the list of suspicious ones. At the same time, most countries do not impose a
direct ban on cryptocurrencies. It is a paradox, but this is how the market
works today. In countries where there is no special crypto regulation, the
authorities can control transactions at their discretion, applying criteria
from related fields. Believe me, it is impossible to predict what measures
should be taken by an exchange platform or an exchange in each specific
case.”
KYC – customer verification
Today the majority of crypto
companies have come to a common opinion with regard to running their
businesses. For example, conducting a customer identification procedure (KYC —
“Know your customer”).
Maxim Kurbangaleev
recommends taking this issue
seriously: “In addition to the classic blockchain scanners, I would advise
businesses to conduct a full audit of customers and counterparties, as banks
do. Alas, this increases the cost of servicing operations, but I believe that
this is the only way out. In a situation where we cannot know exactly what
requirements will be applied to assess the security of a transaction, it is better
to use all known precautions. I hope that in the near future this issue will be
taken to work at the highest level. The sphere needs a set of rules and laws on
which it will rely, a regulatory mechanism that everyone understands, and
possibly licensing of companies. Then the crypto business will cease to be
“something incomprehensible” for both ordinary citizens and
government agencies.”
Media Details:
Maxim Kurbangaleev
+61 7 3608 5634
info@ibis-web3.com
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