Closing Loopholes in Russia Sanctions Act of 2022

To impose sanctions with respect to the use of cryptocurrency to facilitate transactions by Russian persons subject to sanctions, and for other purposes. 1. Short title This Act may be cited as the Closing Loopholes in Russia Sanctions Act of 2022 2. Applicability This Act applies to any person engaged in the business of effecting transactions in digital assets for the account of others, including any communication protocol systems or other similar systems using decentralized finance technology or other similar technology to provide transactional services, including digital wallets, digital asset trading platforms, digital asset exchanges, and digital asset mining services. 3. Definitions In this Act: (1) Digital assets The term digital assets (A) any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology, as specified by the Secretary of the Treasury; and (B) nonfungible tokens and other digital assets using blockchain or other similar technology. (2) Digital asset exchange The term digital asset exchange virtual currency exchange (A) an entity such as a State-licensed money services business or money transmitting business, as defined in section 5330 of title 31, United States Code; and (B) a financial institution that exchanges virtual currency or digital assets. (3) Digital asset wallets The term digital asset wallets (4) Foreign person The term foreign person (5) Hosted wallets The term hosted wallet (6) Unhosted wallets The term unhosted wallets (7) United states person The term United States person (A) an individual who is a United States citizen or an alien lawfully admitted for permanent residence to the United States; or (B) an entity organized under the laws of the United States or any jurisdiction within the United States, including a foreign branch of such an entity. 4. Imposition of sanctions with respect to the use of cryptocurrency to facilitate transactions by Russian persons subject to sanctions (a) In general As soon as practicable after the date of the enactment of this Act, the President may exercise all of the powers granted to the President under the International Emergency Economic Powers Act ( 50 U.S.C. 1701 et seq. (b) Foreign persons described A foreign person described in this subsection is a foreign person— (1) that operates a digital asset exchange or is otherwise a part of the digital asset industry; and (2) that facilitates, directly or indirectly, transactions for any person with respect to which sanctions have been imposed by the United States for actions relating to the Russian Federation, including transactions that facilitate the evasion of such sanctions. (c) Implementation; penalties (1) Implementation The President may exercise all authorities provided under sections 203 and 205 of the International Emergency Economic Powers Act (50 U.S.C. 1702 and 1704) to carry out this section. (2) Penalties A person that violates, attempts to violate, conspires to violate, or causes a violation of this section or any regulation, license, or order issued to carry out this section shall be subject to the penalties set forth in subsections (b) and (c) of section 206 of the International Emergency Economic Powers Act ( 50 U.S.C. 1705 (d) Exception relating to importation of goods (1) In general The requirement to block and prohibit all transactions in all property and interests in property under subsection (a) shall not include the authority or a requirement to impose sanctions on the importation of goods. (2) Good In this subsection, the term good 5. Virtual currency exchanges No digital asset exchange that does business in the United States shall transact with, or fulfill transactions of, hosted wallets and unhosted wallets or cryptocurrency addresses that are known to be, or could reasonably be known to be, affiliated with persons headquartered in the Russian Federation. 6. Transactions reports (a) In general Not later than 60 days after the date of enactment of this Act, the Financial Crimes Enforcement Network shall require United States taxpayers holding greater than $10,000 in cryptocurrency in accounts outside of the United States to file a report described in section 1010.350 of title 31, Code of Federal Regulations, using the form described in that section, in accordance with section 5314 of title 31, United States Code. (b) Rulemaking Not later than 60 days after the date of enactment of this Act, the Secretary of the Treasury shall finalize rulemaking requiring banks and money service businesses to submit reports, keep records, and verify the identity of customers in relation to transactions involving convertible virtual currency or digital assets held in unhosted wallets. 7. Report Not later than 60 days after the date of enactment of this Act, the Secretary of the Treasury shall submit to Congress a report on the progress of the Department of the Treasury in carrying out this Act, including any resources needed by the Department to improve implementation and progress in coordinating with governments of countries that are allies or partners of the United States. 8. Sunset Sections 4 and 5 shall cease to have effect on the date on which the President certifies to Congress that all sanctions imposed by the United States with respect to the Russian Federation have terminated.

Summary: Closing Loopholes in Russia Sanctions Act of 2022 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.