Sanctions in the crypto market – Maxim Kurbangaleev on industry issues

NEW YORK, NY – (NewMediaWire) – December 23, 2022 – (Ny Newswire) – The subject of sanctions is one of the most discussed in 2022, expert Maxim Kurbnagaleev thinks. Restrictive measures can be imposed on companies, sectors of the economy or an entire country by other countries, law enforcement agencies, as well as authorized international organizations.

Economic sanctions include measures (suspension or restriction of activities, fines) that are imposed on the enterprise due to the violation of certain rules of local laws, international standards or other normative legal acts regulating this type of activity .

For example, a country’s central bank may revoke a commercial bank’s license, or a factory may be fined by a regulatory body for improper waste disposal.

These cases are described by a set of rules, the violation of which leads to a sanction. But what if there are no generally accepted rules? Does the activity become illegal in this case, or is it simply not regulated? Participants in cryptocurrency transactions from exchanges to ordinary users ask these questions. Maxim Kurbangaleev told us about the problems in the field of cryptocurrency and ways to solve them.

How do penalties work? Maxim Kurbangaleev

Cryptocurrency, as an alternative payment method, appeared relatively recently in 2008. At first, regulators did not pay attention to this activity, but with the rapid growth in the number of users, they had to change this position.

The principle of operation of blockchain technology is to record in blocks all operations ever performed with a specific unit of cryptocurrency, as well as to copy all available information into new blocks. For security reasons, all this information is encrypted, so market participants cannot scan the entire blockchain without special tools. Previously, such tools did not exist, which is why cryptocurrency was an attractive medium for money laundering.

The story continues

When the volume of transactions became so large that it caught the attention of the regulator, blockchain analysis programs appeared (eg Chainalysis, Coinpath, Etherscan, etc.). They verify, systematize and visually present the data of the cryptographic chain, in order to obtain information about the participants in the transactions. Thanks to these tools, it became possible to track transactions related to illegal activities and the blocking of suspicious companies began.

Maxim Kurbangaleev: SUEX is the first crypto exchange to be sanctioned

The first case of imposing sanctions on a cryptocurrency exchange occurred in September 2021, when the Czech company SUEX was placed on the sanctions list of the United States Office of Foreign Assets Control (OFAC SDN List). According to the US Treasury Department, SUEX was engaged in laundering money from fraudulent schemes.

It is also known that blockchain scanner Chainalysis was involved in the investigation of this case. It would seem that a solution to combat illegal crypto operations has been found, but our guest expert Maxim Kurbangaleev thinks otherwise. According to him, this approach also affects those who have never participated in illegal schemes:

“Imagine that an ordinary user wants to buy cryptocurrency. He opens an electronic wallet, finds an exchange and buys cryptocurrency, which goes to his account. Suddenly it turns out that there are 50 blocks, a specific unit of crypto in the user’s wallet had been involved in an illegal pyramid, which law enforcement found and applied the appropriate sanction to it.Due to this record in the block, the wallet user’s entirety is given a label which fortunately does not block all funds, but severely limits the range of actions available. Is this fair? I’m sure it’s not. Or a platform form of exchange is put on the sanctions list, and suddenly all of the crypto, which has transactions of this exchange in the blockchain, also becomes sanctioned. Moreover, users cannot undo such a transfer in order to protect themselves in one way or another e other,” says the expert.

Unregulated activity: prohibited or illegal? Maxim Kurbangaleev

Cryptocurrency activity has not been legalized in all countries of the world so far. Legalization means that businesses have a legal framework on which to conduct their business. But, as a rule, crypto companies operate all over the world, so it is important for them to comply with the laws not only of the jurisdictions where they are registered, but also where they serve their clients.

At this stage, companies are faced with another problem, the lack of a common legal regime. In some countries, cryptocurrency is a legal means of payment just like the national currency, in other countries it can only be used by individuals, and elsewhere it is completely ignored by local law.

Maxim Kurbangaleev: “In the market there is no general understanding of how to process cryptocurrency transactions, how to verify them, whether the analysis will be sufficient for an operation in another country and whether the transaction will not fall into the list of suspicious transactions At the same time, most countries do not impose a direct ban on cryptocurrencies.It is a paradox, but that is how the market works today. In countries where there are no special regulations on cryptocurrencies, authorities can control transactions at their discretion, applying criteria of related fields.Believe me, it is impossible to predict what measures should be taken by an exchange or exchange in each specific case.

KYC Customer Verification

Today, the majority of crypto companies have come to a common opinion regarding the management of their business. For example, carrying out a customer identification procedure (KYC “Know your customer”).

Maxim Kurbangaleev recommends taking this topic seriously: “In addition to classic blockchain scanners, I would advise companies to perform a full audit of customers and counterparties, as banks do. Alas, this increases the cost of service operations, but I think it is the only one In a situation where we cannot know exactly what requirements will be applied to assess the security of a transaction, it is better to use all known precautions. I hope that in the near future this issue will be taken to work at the highest The sphere needs a set of rules and laws to rely on, a regulatory mechanism that everyone will understand and possibly a license for companies. Then crypto trading will cease to be “something incomprehensible” to ordinary citizens and government agencies. ”

Media details:
Maxim Kurbangaleev
+61 7 3608 5634
[email protected]