(Bloomberg) --

European Central Bank President Christine Lagarde said there are signs that some Russians are attempting to bypass sanctions over the war in Ukraine by converting rubles into cryptocurrencies and stablecoins.

“When you see the volumes of rubles into stable, into cryptos, at the moment it is the highest level that we have seen since maybe 2021,” Lagarde told a virtual event on Tuesday.

Crypto assets “are certainly being used, as we speak, as a way to try to circumvent the sanctions that have been decided by many countries around the world against Russia,” she said.

Measures announced by the U.S. and European Union aim to limit Russia’s ability to do business in dollars and other international currencies. They include penalties on major banks and restrictions on the country’s elite.

That’s led to speculation that crypto -- which is touted as an alternative to traditional financial systems -- could serve as a tool wealthy Russians might use to circumvent those sanctions.

As of last week, there was no evidence of Russia or President Vladimir Putin using cryptocurrencies to evade curbs, according to Jonathan Levin, co-founder of blockchain-analytics firm Chainalysis.

He and several industry experts told the U.S. Senate Banking Committee that the crypto market is too small to facilitate any large-scale sanctions evasion by Russians.

Read more: Crypto World Grapples With Challenge of How to Handle Sanctions

Still, ECB Executive Board member Fabio Panetta warned that crypto could represent a “major loophole” at the heart of the financial system.

“The risk of misuse of crypto-assets to circumvent the sanctions against Russia is an important reminder that these markets must be required to comply with the strictest standards -- including as regards know your customer, anti-money laundering and disclosure requirements,” he said Tuesday.

(Updates with background, ECB’s Panetta starting in sixth paragraph.)

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