Crypto mining could enable sanctioned nations to evade punitive restrictions researchers the International Monetary Fund said. Sanctioned nations could monetize domestic energy supplies, which cannot be exported abroad, by mining cryptocurrencies such as Bitcoin, an IMF report has revealed.
While the magnitude of capital flows to sanctioned actors is “relatively contained,” the IMF said that it still presents “risks to financial integrity.”
“Regulators in the United States and United Kingdom, among others, have urged firms in their jurisdictions, including the crypto-asset sector, to increase vigilance with regard to potential Russian sanction evasion attempts,” the IMF wrote in a report.
“Over time, sanctioned countries could also allocate more resources toward evading sanctions through mining,” the report continued. “The monetization happens directly on blockchains and outside the financial system where the sanctions are implemented. Miners can also generate revenues directly from users that pay transaction fees to miners.”
The IMF estimates that of total Bitcoin mining revenues, which last year reached $1.4bn, Russian miners could have captured close to 11 percent while Iranian miners captured three percent.
The comments come as regulators worldwide shine a light on the use of unregulated cryptocurrencies for sanctions evasion amid the conflict between Russia and Ukraine. The European Union this month unveiled a fresh tranche of sanctions targeting Russia which included a requirement for firms to cease high-value crypto-asset services in the country.
