(Getty Images) Crypto 2023: It's Sanctions Season Before 2022, sanctions in crypto sounded somewhat extravagant. While governments around the world have been after this industry for quite a while, it still seemed that cryptocurrencies, by their initial promise of privacy, freedom and censorship resistance, wouldn't become as politicized as the fiat system. Then 2022 showed how naive those expectations were. "It became very clear that crypto needs to pay attention to sanctions and the consequences of not doing it can be significant," Daniel Tannebaum, partner at the Oliver Wyman consulting firm, said. He believes we will see more enforcement actions related to sanctions, and the mainstream crypto industry will need to keep adjusting to that reality. There is no sign the sanctions pressure on crypto will get any lower in foreseeable future – on the contrary, the U.S. government, for one, believes crypto services must be proactively banning users when they see "clearly observable red flags" and not to wait for the government agencies to guide their hand. An approach like this might soon make crypto exchanges and other services very similar to banks, effectively excluding "risky" clients and leaving many people frozen out of the financial system. And it looks like the exchanges will be given the strongest incentives to "de-risk" as hard as they can. Only this fall, two U.S. exchanges, Bittrex and Kraken, had to settle with OFAC and pay fines for failing to prevent Iranians from using their exchanges. Major U.S. exchanges have been hiring compliance professionals from the banking sector for a while now, Tannebaum said, so it is no surprise "they're starting to look at how to quantify risk in a manner consistent with the banking sector's more mature practices." Does it mean crypto will be purified of crime and the political untouchables? Chances are, it won't be. There will always be a market of shadow over-the-counter (OTC) brokers willing to process crime-related and sanctioned crypto. That has been the way the infamous Conti ransomware hacker group used, for example. With state governments increasing financial sanctions this, crypto services might become as cautious about "risky" users as banks have been traditionally. – Anna Baydakova | 