Bill Overview
Title: Closing Loopholes in Russia Sanctions Act of 2022
Description: This bill requires and authorizes various actions relating to digital assets, such as cryptocurrencies, and sanctions relating to Russia. Specifically, the bill (1) authorizes the President to impose sanctions on a foreign person (i.e., individual or entity) in the digital asset industry that facilitates transactions involving persons subject to U.S. sanctions relating to Russia; (2) prohibits digital asset exchanges from transacting with digital asset wallets or cryptocurrency addresses that are known to be, or could reasonably be known to be, affiliated with persons headquartered in Russia; and (3) requires U.S. taxpayers holding a certain amount of cryptocurrency in non-U.S. accounts to report such holdings to the Internal Revenue Service.
Sponsors: Rep. Sherman, Brad [D-CA-30]
Target Audience
Population: People in the digital asset industry transacting or potentially transacting with Russia
Estimated Size: 750000
- The bill affects individuals and entities in the digital asset industry facilitating transactions involving sanctioned persons, potentially impacting many cryptocurrency users and businesses globally.
- There are numerous digital asset exchanges worldwide, some of which may inadvertently or deliberately facilitate transactions with sanctioned Russian entities.
- Any foreign person in the digital asset industry that could potentially engage with sanctioned entities may face sanctions themselves.
- Cryptocurrency users who are U.S. taxpayers need to be aware of report requirements to the IRS, which could affect compliance and legal proceedings for non-compliance.
- Numerous individuals and entities may need to reassess their engagement with digital assets to ensure compliance with the new regulations, which could be widespread given the global nature of cryptocurrency.
Reasoning
- Given the popularity and substantial user base of cryptocurrencies, a significant number of Americans are likely involved or interested in digital assets. Among them, those who actively use foreign-based cryptocurrency platforms or digital wallets will be directly impacted by these policy changes.
- The regulation will primarily affect users engaging in cross-border transactions, particularly those holding or using significant amounts of cryptocurrency that might be subject to reporting requirements or new sanctions-focused operational restrictions.
- The policy could incentivize shifts in behavior among cryptocurrency users, such as increasing transparency about their holdings or changing transaction partners to avoid non-compliance with the sanctions.
- The long-term effects on wellbeing might vary widely based on individual dependency on cryptocurrency investments both for personal financial management and business transactions.
Simulated Interviews
Software Developer (San Francisco, CA)
Age: 32 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I think this policy will bring more oversight which is probably good for the security of cryptocurrency as a whole.
- I'm a bit worried about needing to report my foreign cryptocurrency holdings to the IRS—it adds complexity.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Cryptocurrency Trader (Austin, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- This seems like it will complicate my trading activity, especially with respect to the platforms I can use.
- I understand the need for regulation, but it might make things more difficult for day-to-day operations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 8 |
| Year 2 | 5 | 8 |
| Year 3 | 5 | 8 |
| Year 5 | 6 | 8 |
| Year 10 | 6 | 8 |
| Year 20 | 7 | 8 |
Financial Analyst (New York, NY)
Age: 28 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 15/20
Statement of Opinion:
- The policy doesn't impact me directly since I only use US exchanges.
- However, it might affect the market prices due to changes in global regulations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 8 |
| Year 20 | 8 | 8 |
Small Business Owner (Seattle, WA)
Age: 40 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- I'm really worried about the paperwork and compliance with IRS rulings.
- might consider revising my transactions to ensure I don't get hit with penalties.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Retired (Miami, FL)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 12/20
Statement of Opinion:
- I understand the need for regulation but worry this is just the start of tighter restrictions.
- Any new reporting requirements will be a hassle for someone like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 7 |
| Year 20 | 7 | 7 |
Start-up Founder (Boston, MA)
Age: 29 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 7.0 years
Commonness: 8/20
Statement of Opinion:
- It could complicate my business transactions if our client exchanges are affected.
- But I see the benefit in deterring illicit actors in the space.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Accountant (Chicago, IL)
Age: 33 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I think these reforms are helpful for transparency and can reduce some of the 'wild west' aspects of digital assets.
- Our clients will need advice to stay compliant, which can be a good business opportunity.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 8 | 9 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Freelancer (Los Angeles, CA)
Age: 25 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- I'm nervous about how this might increase my admin load.
- However, transparency is crucial if cryptocurrency is going to be taken seriously.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 6 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 8 |
Financial Advisor (Portland, OR)
Age: 55 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 14/20
Statement of Opinion:
- There are promising aspects to this policy in terms of protecting clients from potentially risky transactions.
- As regulations solidify, it will become easier to provide investment guidance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 8 | 8 |
Retired Government Employee (Denver, CO)
Age: 60 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 18/20
Statement of Opinion:
- I'm not directly affected, though regulations like these seem inevitable.
- Hopefully, they will make digital currencies safer.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Cost Estimates
Year 1: $500000000 (Low: $400000000, High: $600000000)
Year 2: $500000000 (Low: $400000000, High: $600000000)
Year 3: $500000000 (Low: $400000000, High: $600000000)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The robust tracking of digital assets can aid in reducing sanctions evasion and enhance the credibility of cryptocurrencies.
- Global cooperation and technology evolution in digital asset trading may necessitate further amendments or augmentations in enforcement.
- Public and political sentiments towards cryptocurrency regulation may affect implementation and compliance.