A leading association of cryptocurrency companies is pleading with Congress to not move ahead with legislation that aims to restrict sanctioned Russians from using digital currencies to dodge sanctions.

On Friday, CNBC reported that The Blockchain Association, a lobbying group that represents more than 70 crypto platforms including Ripple, Crypto.com and Dragonfly Capital has been trying to convince Congress that cryptocurrencies are not being used to avoid sanctions against Russia.

The industry is facing a tall task as Congress pushes for more sanctions aimed at supporting Ukraine as it faces down Russian forces amidst a renewed offensive in the country’s east.

Both the Democratic-controlled House and Senate are advancing a pair of bills aimed at creating the authority to prohibit transactions between U.S.-based crypto exchanges and Russia. It would also provide power to sanction foreign exchanges that process cryptocurrency transactions with sanctioned Russian individuals or companies.

Democrats have been adamant in their support for choking off potential avenues for Russia to snake past sanctions over the war. Sen. Elizabeth Warren, D-Mass., who sponsors the Senate version of the bill has accused Russian oligarchs of using cryptocurrencies to move money.

In an interview with NPR in March, Warren took aim at reluctant crypto firms that may be hesitant to do more to prevent Russian crypto transactions from being tracked for fear it will compromise the anonymity central to their appeal.

Some exchanges are already following due diligence practices similar to traditional banks, said Warren, but "there are others who say nope, [anonymity] is a feature."

Indeed, several cryptocurrency exchanges were initially reluctant to block transactions from Russia for this reason. Russia itself has also made clear that it is open to using Bitcoin to settle certain transactions inhibited by sanctions like energy sales. To this, the Biden administration has been working to limit how much Moscow can rely on cryptocurrency as an escape hatch.

However, there has been limited evidence that Russia has been actively using crypto for this purpose.

In March, FBI Director Christopher Wray told the House Intelligence Committee that Russia’s ability to use crypto for sanctions evasion was likely “overestimated” by Moscow and endorsed the current tools used by the intelligence community to thwart them. Other analysts suggest that laundering assets through cryptocurrency is possible, but it is unlikely to help stave off the worst effects of the current sanctions regime.

Instead, the cryptocurrency industry has perceived the push for new legislation as an attack on the wider business community centered around cryptocurrency.

Jake Chervinsky, the head of policy at the Blockchain Association, wrote on Twitter that the bill was less about Russian oligarchs and more about Sen. Warren's "crusade against a technology that she doesn't understand.

"There’s still a lot of misunderstanding about crypto out there," Chervinsky wrote in an op-ed in The Hill on Friday. "But as the crypto industry rapidly becomes a major player in global finance, we encourage Congress to engage with our industry."

Editor's note: The story when originally published incorrectly said Sen. Warren's bill was co-sponsored by Sen. Sheldon Whitehouse, D-RI., and Sen. Roger Wicker, R-Miss. The three senators collaborated on a separate bill called the Klepto Act.

MEET IBT NEWS FROM BELOW CHANNELS

© Copyright IBTimes 2022. All rights reserved.