With the tightening of international sanctions and increasing regulatory oversight on cryptocurrencies, global businesses are facing new legal challenges. Arash Yazdi, an international lawyer specializing in commercial law, analyzes the impact of these restrictions on trade and investment.
In a recent interview with legal media, Yazdi explained that there is no single comprehensive convention covering all U.S. and EU sanctions. The United States enforces sanctions through the “International Emergency Economic Powers Act” (IEEPA) and the “Office of Foreign Assets Control” (OFAC), while the European Union implements restrictions through “Regulation No. 267/2012” and the “Blocking Statute.” Understanding these regulations is crucial for international businesses, as failure to comply may result in secondary sanctions and significant financial penalties. Many multinational corporations have adopted compliance strategies to mitigate these risks.
However, some countries and entities attempt to circumvent sanctions using cryptocurrencies, informal banking channels, and alternative financial tools. Yazdi warned that such methods could lead to serious legal and economic consequences if they do not adhere to global financial standards.
Regulatory scrutiny in jurisdictions like the UAE has intensified, making compliance essential. Yazdi highlighted a notable scenario: a $20 million cryptocurrency transaction between an Indian seller and a British buyer in the UAE. If conducted without the necessary approvals from the Virtual Assets Regulatory Authority (VARA) or the Abu Dhabi Global Market (ADGM), such transactions could lead to financial crimes, money laundering charges, and legal violations. Under Federal Law No. 4 of 2022, all cryptocurrency transactions in the UAE are subject to stringent oversight. Failure to comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations could result in hefty fines and even imprisonment.
Given these complexities, Yazdi advised cryptocurrency market participants to be fully aware of the UAE Central Bank regulations, VARA, and ADGM requirements to mitigate legal risks. He also emphasized that many countries still lack clear legal frameworks for cryptocurrency transactions, exposing investors to unforeseen risks. In contrast, jurisdictions such as the UAE and the European Union have implemented well-defined cryptocurrency regulations, and violations could lead to severe legal and financial consequences.
International regulatory bodies like the Financial Action Task Force (FATF) and the International Monetary Fund (IMF) continuously monitor cryptocurrency policies. Countries failing to enforce anti-money laundering and counter-terrorism financing regulations may face economic and banking restrictions. Investors must ensure that all transactions are conducted through officially registered entities to prevent criminal charges and potential asset seizures.
Yazdi stressed that a thorough understanding of international sanctions and cryptocurrency regulations is vital for companies and investors. Non-compliance could lead to criminal prosecution, asset confiscation, and even business restrictions in certain jurisdictions. Staying updated on regulatory changes and seeking professional legal consultation is essential.
“In today’s global economy, regulatory compliance is not just a requirement but a competitive advantage. Companies that adhere to legal frameworks will achieve sustainable growth, while those that fail to comply will face serious legal and financial challenges,” Yazdi concluded.
