(Washington, DC, July 11, 2019) – A new Foundation for Defense of Democracies (FDD) report issued today examines how four U.S. adversaries – Russia, Iran, China and Venezuela – are trying to use cryptocurrencies and blockchain technology to evade and undermine U.S. sanctions, with the ultimate goal of operating entire economies outside the U.S.-led global financial system.
In “Crypto Rogues: U.S. State Adversaries Seeking Blockchain Sanctions Resistance,” authors Yaya J. Fanusie and Trevor Logan write that U.S. adversaries have been unable to conduct significant international commerce without moving through the pipes of the U.S.-led global financial system. That may change, however, as the four have initiated blockchain technology experiments that their leaders paint as tools to offset U.S. financial coercive power and increase sanctions resistance.
“America’s adversaries see blockchain technology as a key component of their efforts to counter U.S. financial power,” says Fanusie, an adjunct fellow at FDD’s Center on Economic and Financial Power (CEFP and former CIA analyst. “And the U.S. position of influence is not necessarily permanent.”
The authors find that:
“Technology has created a potential pathway to alternative financial value transfer systems outside of U.S. control,” Logan says. “The target timeline may be more than a decade away, but these actors are developing the building blocks now.”
“Our adversaries seek to weaken U.S. economic influence, displace the U.S.-led financial system, and lessen dependency on the U.S. dollar and Western institutions through the establishment of alternate platforms, commercial arrangements, and even the potential of an alliance of rogue crypto networks,” said CEFP Chairman Juan C. Zarate.
FDD has long been at the forefront of research into potential illicit uses of cryptocurrencies and how blockchain technology will impact U.S. national security. Last year, FDD published the first-ever public domain analysis of how digital currency is laundered around the world.
The authors provide eight specific recommendations the Trump administration and Congress can take for the United States to remain ahead of its adversaries in the realm of cryptocurrencies and blockchain technology and to maintain the integrity of the global financial system.
The Foundation for Defense of Democracies (FDD) is a Washington, DC-based nonpartisan policy institute focusing on national security and foreign policy. Visit our website at fdd.org and connect with us on Twitter, Facebook, and YouTube.
CEFP studies national economic security, with a focus on how the U.S. can leverage its economic and financial power to achieve its national security objectives. CEFP promotes greater understanding of how the U.S. government can employ its economic and financial authorities to best counter its adversaries.
CCTI seeks to advance U.S. prosperity and security through technology innovation while countering cyber threats that seek to diminish it. The Center promotes a greater understanding within the U.S. government, private sector, and allied countries of the threats and opportunities to national security posed by the rapidly expanding technological environment.