Representations of virtual cryptocurrencies are seen in this illustration taken November 28, 2021.
Representations of virtual cryptocurrencies are seen in this illustration taken November 28, 2021. Reuters / DADO RUVIC

The U.S. Treasury Department has reached out to cryptocurrency companies about their cybersecurity controls amid concerns that Russia could wage retaliatory cyber attacks in response to Western sanctions, according to a person familiar with the situation.

The United States and its allies have unleashed a slew of sanctions targeting Russia's banks, state-owned entities, and elites, among others, following the country's invasion of Ukraine

Governments have warned for weeks that Russia or its allies could carry out cyber attacks in retribution for sanctions, leading banks to increase monitoring, scenario-planning and line up extra staff in case hostile activity surges.

In a sign U.S. regulators see the ballooning cryptocurrency industry as a growing source of systemic risk, U.S. Treasury officials have also been in discussions with cryptocurrency exchanges and trade groups to ensure U.S. digital assets are safe, said the person familiar with the matter.

Officials are also sharing indicators that IT systems have been compromised, such as a network infiltration or a data breach, with crypto and other financial firms, the person said.

The value of all cryptocurrencies surged past $3 trillion last year, with approximately 13% to 14% of Americans invested in digital assets as of 2021, according to research by the University of Chicago.

As the digital asset has become more popular, crypto hacks have grown. Last year, for example, an anonymous hacker stole roughly $600 million in cryptocurrencies from Poly Network, a decentralized finance network, before giving it back. Hackers also stole at least $150 million from crypto exchange BitMart.

Regulators have warned that crypto routs or runs on crypto currencies could pose a risk to the broader financial system.

Some U.S. lawmakers have expressed concern that digital assets could be used to evade Western sanctions, although Biden administration officials have played down that risk.