Countries such as Russia and Iran may eventually use cryptocurrency mining to evade sanctions, the International Monetary Fund warned in a report.
There’s a risk that sanctioned nations will leverage their energy resources—which can’t be exported—to power mining, an energy-intensive process of validating coin transactions, the IMF said. By expanding their mining operations, governments could also generate revenue directly from transactions fees.
The warnings follow heightened calls by lawmakers for officials to take steps to ensure digital currencies aren’t being used to evade the sweeping restrictions the U.S. and its allies put in place following Russia’s invasion of Ukraine.
“Regulators in the United States and United Kingdom, among others, have urged firms in their jurisdictions, including the crypto asset sector, to increase vigilance with regard to potential Russian sanction evasion attempts,” the organization said.
While mining could be used to bypass rules in the future, the practice in sanctioned countries is small today, according to the report. Although regulators say they are concerned about criminals using crypto to thwart rules, trading in rubles on exchanges has declined in recent weeks.