Bank of England Calls on Crypto Firms About Sanctions
Amid the conflict between Russia and Ukraine, the UK’s central bank has urged cryptocurrency firms to enforce sanctions.
On Friday, the Bank of England and the Financial Conduct Authority (FCA) issued a joint statement; they reiterated that financial services firms, including the crypto asset sector, should “play a role” in enforcing sanctions. Financial regulators said they are working with international partners to address concerns that digital assets allow people to avoid punitive economic measures.
The Financial Conduct Authority has written to regulated cryptocurrency firms in the United Kingdom to remind them of their responsibilities in ensuring the application of sanctions.
Cryptocurrency firms have come under scrutiny during the conflict between Russia and Ukraine. Cryptocurrency has proven to be an essential source of fundraising for the Ukrainian government. It has received over $60 million in digital asset donations; hence, governments are concerned that it will circumvent punitive economic measures imposed on Russia.
Shortly after the invasion, Ukraine’s Vice Prime Minister demanded blocking all Russian and Belarusian accounts on cryptocurrency exchanges. The world’s largest cryptocurrency exchanges, including Binance, Coinbase, and Kraken, have resisted calls for a blanket ban on Russian users.
Bitcoin-Banning measure- EU Parliament Vote
On Monday, a proposed rule that effectively amounts to a ban on the leading cryptocurrency Bitcoin will be voted on by European Union (EU) parliamentarians, with the outcome largely unknown.
The Economic and Monetary Affairs Committee of the European Parliament set to vote on a draft of the proposed Markets in Crypto Assets (MiCA) framework; MiCA is the EU’s comprehensive legislative package for governing digital assets.
The rule proposes a phase-out plan for cryptocurrencies like bitcoin and ether, which are already traded in the EU, to shift their consensus mechanism from proof-of-work to other methods that use less energy, such as proof-of-stake.
Although there are plans to transition ethereum to a proof-of-stake consensus mechanism; however, it is unclear whether the same option exists for bitcoin.
The provision drew a swift rebuke from the crypto community around the world.
An earlier version of the provision proposed outlawing proof-of-work crypto in the EU beginning in January 2025. Stefan Berger, the EU parliamentarian overseeing the MiCA framework’s content and progress, has been attempting to compromise on proof-of-work restrictions.