(Reuters) - Two lawmakers are pressing the Biden administration on the use of cryptocurrency to evade sanctions in Russia, Iran and North Korea, asking officials what additional authorities might be needed to prevent digital assets, such as stablecoin Tether from being used by sanctioned entities in Russia and elsewhere.

WHY IT'S IMPORTANT

The letter sent on Sunday by U.S. Senators, Democrat Elizabeth Warren and Republican Roger Marshall, to officials including Treasury Secretary Janet Yellen and Defense Secretary Lloyd Austin show increasing scrutiny on how cryptocurrencies could be used to circumvent sanctions.

CONTEXT

Warren and Marshall raised particular concern about the use of Tether, whose value is pegged to the U.S. dollar and designed to maintain a stable value.

The Wall Street Journal reported earlier this month that Russian middlemen used Tether to evade Western sanctions in order to source weapons parts for drones and other military equipment.

Reuters also reported this month that Venezuela's state-run oil company PDVSA plans to use Tether in its crude and fuel exports as the U.S. is set to reimpose oil sanctions on the country.

KEY QUOTE

"The national security threat posed by cryptocurrency requires a commensurate response by our country's defense community," Warren and Marshall said. They noted that even though Tether's preferred crypto trading platform Garantex has been sanctioned, "it is not clear if these actions have stopped the flow of funds through the platform."

THE RESPONSE

Tether did not immediately respond to a request for comment, but has previously said it respects U.S. Treasury's list of sanctioned entities and is committed to ensuring sanctioned crypto wallet addresses are frozen.