An unsealed memorandum opinion by Magistrate Judge Zia Faruqui of the U.S. District Court in Washington, D.C., states that virtual currencies are subject to sanctions laws, just like fiat currencies.

Why should we care?
Judge Faruqui’s memorandum was most likely unsealed because the Department of Justice has charged a suspect with operating a crypto platform allegedly skirting sanctions. This would be the first time the DOJ has filed a criminal case like this, according to Ari Redbord, Head of Legal and Governmental Affairs at TRM Labs. This signals to other crypto exchanges that they are liable for users who evade sanctions on their platforms, whether the exchange colludes knowingly or not. The DOJ has informally treated crypto like any other asset class as it relates to sanctions laws, but Judge Faruqui has codified that practice, and makes crypto regulation clearer and more comprehensive across government branches—in line with U.S. President Biden’s executive order from March. “Judge Faruqui's opinion pours cold water on the idea that cryptocurrencies mean the death of sanctions,” said Anupam Chander, Professor of Law at Georgetown University. This tempers expectations of a crypto rush given a tightening sanctions regime in the wake of Russia’s invasion of Ukraine. Instead, these legal developments bring crypto closer to cash in its use and regulatory purview, but may legitimize these exchanges through greater compliance in the long run. Whether that’s enough to make crypto recover from its current freefall is another question.