Christine Lagarde, President of the European Central Bank (ECB), has now urged the European Union to expedite MiCA regulations in order to prevent Russia from evading new sanctions.
She made the remarks during a press conference when asked if Russia could use cryptocurrency to circumvent sanctions.
“There are always criminal ways to try to get around a prohibition,” she said. “That’s why it’s critical that MiCA is pushed through as soon as possible so we have a regulatory framework.”
Markets in Crypto-Assets, or MiCA, is a regulation introduced by the EU two years ago that governs distributed ledger technology (DLT) and digital asset operations while protecting investors from risk. The regulation has yet to be made into law.
Furthermore, six European countries, including Germany, Austria, Italy, Luxembourg, Spain, and the Netherlands, are attempting to bring crypto firms under the supervision of the EU’s financial crime watchdog in order to prevent financial crimes such as money laundering and terrorist financing. The new regulatory body will go into effect in 2024.
Russia launched a full-scale invasion of Ukraine in the early hours of Thursday, targeting the country’s capital, Kyiv, as well as several other major cities. Many countries around the world have condemned Russia’s attack on Ukraine, which was sanctioned by President Vladimir Putin.
Russia’s move has elicited harsh criticism from European Union (EU) leaders and other world leaders, who have described it as senseless aggression.
Provoked by Russia’s continued attacks on Ukraine, the EU has joined other global leaders such as the United Kingdom and the United States in imposing sanctions on Russia, limiting Russia’s access to E.U. financial and capital markets.
Following the sanctions, media reports suggest that Russia may use cryptocurrency to avoid sanctions because the asset class’s decentralized nature allows it to circumvent restrictions imposed by any government or financial institution.
President Putin only recently urged the government and the Bank of Russia to reach an agreement on crypto regulations, citing the benefits that the asset class offers. As a result, the European Central Bank appears concerned that Russia may turn to cryptocurrency, though only time will tell if this occurs.