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Reporting to the House Financial Services Committee on Wednesday, Yellen said the Treasury Department was not aware of cryptocurrencies being used to evade sanctions on Russian oligarchs and government agencies. Yellen has been repeatedly questioned about digital asset security at the committee's annual hearing on the international financial system.
"Obviously we are aware of the possibilities that cryptocurrencies could be used to circumvent sanctions, and we are carefully monitoring to make sure that doesn't happen," Yellen said. "But I think we have a lot of control in this area and we are and will take advantage of that."
Yellen also assured the board that it is difficult to use cryptocurrencies to avoid sanctions because blockchain is being "regularly checked," and large transactions will be noticed.
"Cryptocurrency exchanges are being subject to AML/CFT (Anti-Money Laundering/Anti-Terrorism Financing) regulations, so they are part of the financial system," she said. "So far, we have not seen any significant avoidance of using cryptocurrencies."
The Foreign Assets Control Office of the Ministry of Finance announced on Tuesday (April 5) that it will impose sanctions on Garantex, the Moscow-based cryptocurrency exchange. The reason given is that the exchange did not comply with the AML/CFT regulations. At the same time, the Ministry of Finance also imposed sanctions on Hydra, the Russian-language darknet market, for carrying out Ransomware attacks. The Treasury Department is one of the agencies in the U.S. that imposes sanctions on these organizations.
Sanctions are not the only cryptocurrency-related issue that members of the committee are interested in.
Congressman Bill Foster asked about digital identity verification. Yellen said that the Treasury Department has a "broad stake in digital identity, in part because we manage public interests and tax refunds." She also assured the congressman that "we are taking the actions we can to advance this agenda."
Delegate Warren Davidson of Ohio expressed his concern about "preserving self-storage e-wallets, which he calls "self-managing private assets without intermediaries."
Yellen will talk about U.S. President Joe Biden's executive regulation of digital assets and the Treasury Department's approach to the issue at American University in Washington, D.C. on Thursday.
