Today I asked the following question to the High Representative of the EU for Foreign Affairs:
According to recent reports (1) North Korean hackers targeted four different exchanges that trade bitcoin and other digital currencies in South Korea in July and August, allegedly as a way to overcome sanctions on international payments. Simultaneously, an advisor close to President Putin has said that cryptocurrencies like Bitcoin may help Russian banks avoid international sanctions (2), while Venezuela's President Maduro has announced that the country would create a "cryptocurrency" that would help Venezuela in "overcoming the financial blockade" (3
How does the HR/VP asses the treat of cryptocurrencies like bitcoin to the effectiveness of the international sanctions regime?
Which measures does the HR/VP envisage to mitigate the use of cryptocurrencies as a way to circumvent international sanctions?
- 1) http://money.cnn.com/2017/12/12/technology/north-korea-bitcoin-hoard/index.html
- 2) http://www.theage.com.au/world/vladimir-putin-aide-eyes-cryptocurrencies-to-beat-sanctions-russian-newswire-says-20171212-h03jju.html
Response by the Commission on the 7th of March 2018:
European Union (EU) sanctions regimes are neutral as regards the choice of technology used in relation to asset freezes or other financial restrictions such as the prohibition to provide financial and payment services for sanctioned goods, services or persons. Cryptocurrency-based transactions are therefore covered by EU sanctions Regulations. EU persons irrespective of their location and foreign persons acting in the EU territory are prohibited from engaging in sanctioned activities even if they are conducted with or through cryptocurrencies.
However, cryptocurrencies may present specific challenges to law enforcement authorities in investigating transactions and detecting possible breaches of sanctions. The relevant Commission services are accordingly analysing the issue further.