Former MI6 chief Sir Alexander Younger has warned that a crackdown on crypto could be looming as states ramp up sanctions against Russia.
With Russia facing sanctions from European states and the US over its invasion of Ukraine the country has clear incentives to circumvent the dollar economy to access financing. Speaking at Chainalysis’ Links conference in London this morning, Younger warned that the crypto economy, which is not under the control of state actors, could become a source of uncontrolled risk amid the conflict sparking a crackdown.
“There’s a tragedy unfolding in front of us,” Younger said, referencing the invasion of Ukraine by Russian troops.
“When it comes to sanctions the crypto community needs to think hard about where this is going,” the former MI6 chief continued, warning that “the crypto system is about to become an enemy of its own success.”
As the world splits into two distinct “technospheres” Younger warned that crypto could face a crackdown unless companies are able to “get ahead of the conversation” about the use of crypto to evade sanctions.
Responding to the comments Jonathan Levin, the co-founder of Chainalysis, a blockchain research and crypto compliance company, said that the private sector is well placed to help state actors ensure that sanctions are enforced.
“if it turns out that actors are using a lot of crypto to evade sanctions that is a problem,” Levin said, agreeing with Younger’s assessment.
“I think we have the tools in place to allow the private industry to detect that type of activity” Levin continued, noting that Chainalysis is ready to help government agencies detect illicit crypto transactions and enforce sanctions.
Chainalysis is already in the process of tracking crypto related crime in Russia. A recent report by the firm found that last year 74 per cent of crypto revenue from global ransomware attacks, some $400m, was sent to actors affiliated with Russia.
With geopolitical tensions increasingly being played out in the digital world the UK could find itself subject to retaliatory cyber attacks if relations with Russia deteriorate further. Levin said that the Russian government has been creating a permissive environment which allows the attacks to occur.
“You can have state sponsored actors or state sanctioned attacks. Either way malicious actors are able to operate without impunity,” Levin said.