U.S. actions to Russia-Ukraine war: First virtual currency mining sanctions

OFAC issued its first sanctions against a virtual currency mining entity, stating that by operating vast server farms that sell virtual mining capacity internationally, the entity and its subsidiaries help Russia monetize its natural resources. OFAC added that the mining companies rely on imported computer equipment and fiat payments, making them vulnerable to sanctions. OFAC has also imposed sanctions on a “darknet market” and a virtual currency exchange, clarifying that sanctions actions apply regardless of whether a transaction is denominated in traditional fiat currency or virtual currency. (See KPMG Regulatory Alert, here.) Notably, earlier this month, Treasury outlined policy objectives for establishing a regulatory framework around crypto and digital assets, including the need to balance the development of digital assets with the risks associated with the new activities, products, and services that are enabled by the technology advances, including issues of national security. (See KPMG Regulatory Alert, here.)