Bill Overview
Title: Russian Digital Asset Sanctions Compliance Act of 2022
Description: This bill allows additional sanctions against Russia and creates specified reporting requirements regarding digital assets. Specifically, the President must periodically identify foreign persons who facilitate evasion of Russian sanctions using digital assets. The bill authorizes sanctions against such persons. The bill requires a U.S. taxpayer engaged in offshore digital asset transactions greater than $10,000 to file an annual Report of Foreign Bank and Financial Accounts with the Financial Crimes Enforcement Network. The bill allows the Department of the Treasury to prohibit U.S. digital asset trading platforms and transaction facilitators from transacting with Russian digital asset addresses. Additionally, Treasury must report on its progress in implementing the bill and must annually identify foreign digital asset trading platforms that are a high risk for sanctions evasion, money laundering, and other illicit activities.
Sponsors: Rep. Sherman, Brad [D-CA-30]
Target Audience
Population: Individuals involved in international digital asset transactions and U.S. taxpayers with significant asset holdings
Estimated Size: 200000
- The bill targets foreign individuals facilitating sanctions evasion using digital assets, affecting individuals engaging in such activities globally, particularly those interacting with Russian entities.
- The requirement for U.S. taxpayers to report transactions over $10,000 affects Americans engaged in significant offshore digital asset trading.
- The prohibition for U.S. platforms to transact with Russian digital asset addresses impacts users of these platforms both in the U.S. and globally if restricted access to Russian addresses affects their trading ability.
- The bill affects global digital asset trading platforms, especially those deemed high-risk for sanctions evasion, by increasing compliance burdens and possible restrictions.
Reasoning
- The policy primarily affects U.S. taxpayers engaging in significant offshore digital asset transactions, particularly those over $10,000. Therefore, individuals with the financial capability to engage in high-value cryptocurrency trading are more likely to be affected by the reporting requirement.
- The sanctions against Russian digital asset facilitators and the prohibition on U.S. platforms interacting with Russian addresses mainly impacts international traders who actively engage with Russian markets or require access to these for their trade activities.
- The policy impacts are time-sensitive, with more immediate effects expected in initial years due to new reporting and compliance implementations, but could stabilize or decrease in long-term as individuals adapt or change trading behaviors.
- To assess a range of perspectives, interviews should include individuals directly affected by the sanctions (e.g., traders with Russian dealings), affluent crypto investors dealing offshore, as well as non-affected cryptocurrency users to provide contrast.
- While the direct target population is small relative to all cryptocurrency owners, the impact of increased compliance costs and operational restrictions could trickle down, indirectly affecting broader trading environments.
Simulated Interviews
Cryptocurrency Trader (San Francisco, CA)
Age: 34 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- I understand the necessity for sanctions, but it adds layers of bureaucracy that make international transactions cumbersome.
- This may limit my access to certain markets and impact my trading profits.
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 | 5 | 7 |
| Year 10 | 5 | 7 |
| Year 20 | 5 | 7 |
Financial Advisor (New York, NY)
Age: 45 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- The new reporting requirements increase the administrative burden on my clients, but they have the resources to comply.
- It shouldn't significantly impact my work unless clients decide to move away from digital assets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 6 | 8 |
| Year 5 | 6 | 8 |
| Year 10 | 6 | 8 |
| Year 20 | 6 | 8 |
Software Engineer (Austin, TX)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 1.0 years
Commonness: 10/20
Statement of Opinion:
- I don't think these rules will affect me much since I mostly trade domestically.
- The focus seems to be on higher-scale operations which doesn't apply to my activities.
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 |
Retired Businessman (Miami, FL)
Age: 56 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 7.0 years
Commonness: 5/20
Statement of Opinion:
- This policy means I need to keep a closer eye on compliance requirements, which could be a bit of a hassle.
- However, I am supportive of measures that aim for transparency and fairness in trade.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 9 |
| Year 2 | 8 | 9 |
| Year 3 | 7 | 9 |
| Year 5 | 7 | 9 |
| Year 10 | 7 | 9 |
| Year 20 | 7 | 9 |
Freelance Writer (Seattle, WA)
Age: 31 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 8/20
Statement of Opinion:
- As someone who writes about these topics, it's interesting to see how these regulations develop.
- Personally, I don't think I'll feel any direct impact, unless it trickles down to make general use more difficult.
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 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Independent Investor (Chicago, IL)
Age: 38 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- If the platforms I use are restricted, it could severely impact my ability to conduct transactions efficiently.
- I will need to explore alternative platforms or markets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 7 |
| Year 2 | 5 | 7 |
| Year 3 | 5 | 7 |
| Year 5 | 4 | 7 |
| Year 10 | 4 | 7 |
| Year 20 | 4 | 7 |
Student (Los Angeles, CA)
Age: 27 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 9/20
Statement of Opinion:
- As a student, I mostly handle small transactions domestically, so I don't expect direct effects from this policy.
- My primary concern would be the broader implications on the market volatility or opportunities for learning.
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 |
University Professor (Boston, MA)
Age: 50 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- While I study these impacts academically, my personal life remains largely unaffected by these regulations.
- The area of reporting requirements offers rich data for my research though.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Accountant (Denver, CO)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- The policy adds to the complexity of the work I do for clients, especially with large offshore transactions.
- Keeping up with regulatory changes is critical to ensure compliance and accurate filings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 6 | 7 |
| Year 20 | 6 | 7 |
Customer Service Representative (Phoenix, AZ)
Age: 22 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- I think these regulations are for people who deal big in crypto, unlike me since I just started with small investments.
- As long as it doesn't complicate the basics of buying and selling, I'm okay with it.
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: $7500000 (Low: $5000000, High: $10000000)
Year 2: $7500000 (Low: $5000000, High: $10000000)
Year 3: $7500000 (Low: $5000000, High: $10000000)
Year 5: $7500000 (Low: $5000000, High: $10000000)
Year 10: $7500000 (Low: $5000000, High: $10000000)
Year 100: $7500000 (Low: $5000000, High: $10000000)
Key Considerations
- Implementation costs could vary significantly depending on the complexity and scope of digital asset transaction monitoring systems required.
- The need for international cooperation in identifying and sanctioning foreign entities would influence effectiveness and costs.
- Potential digital asset market volatility could affect trade volumes, impacting tax revenue forecasts.