The crisis between Russia and Ukraine has wreaked havoc on the global economy. The United States, Canada, the United Kingdom, and the European Union have all issued sanctions against Russia and its central bank. Many experts believe that cryptocurrency might help Russia avoid economic sanctions, but is this true?
Crypto Sanctions Against Russia: Are They Necessary?
Senator Elizabeth Warren of the United States has encouraged financial regulators to tighten laws against Russia, citing the country’s growing interest in cryptocurrency.
Cryptocurrencies risk undermining sanctions against Russia, allowing Putin and his cronies to evade economic pain.
U.S. financial regulators need to take this threat seriously and increase their scrutiny of digital assets. https://t.co/4lCUNcUC29
— Elizabeth Warren (@SenWarren) February 28, 2022
Since the United States and the European Union stopped many Russian banks from utilising the SWIFT system, a controversy has erupted about Russia’s use of cryptocurrency to circumvent sanctions. Many crypto experts, on the other hand, believe that the chances of this happening are improbable.
One of the main arguments given is that the crypto market isn’t large enough to meet the amount required by Russia.
Why is it that not even Crypto can help Russia?
It is highly doubtful that Russia will be able to escape the tight sanctions by hiding behind cryptography. The Bitcoin Policy Institute released data on how Bitcoin is bolstering Western pressure on Russia while also assisting Ukrainians in raising finances in the midst of the crisis. According to the analysis, Bitcoin or any other alt-coin will not be able to shield Russia from the looming sanctions.
- The paper demonstrates how Bitcoin, the world’s most popular cryptocurrency, is still a long way from replacing the dollar and the euro as a trading currency.
- Russia’s attempt to sell its goods in cryptocurrency will overstress the currency’s extreme volatility, making it difficult for the country to manage its commodities profits.
- According to sources, Russia’s annual exports were roughly $400 billion before the conflict, which is less than half of Bitcoin’s current market worth ($836 billion).
- Compliance with US sanctions regimes is a must for major bitcoin trading platforms. As a result, violators will find it difficult to conceal their bitcoin or other cryptocurrency transactions.
- Blacklist-designated addresses and non-compliant exchanges elicit a strong response from cryptocurrency exchanges.
JUST IN – Bitcoin Policy Institute memo debunks claims that #Bitcoin will help Russia evade sanctions, argues that BTC helps individuals in Ukraine and Russia.🧵 pic.twitter.com/zkRGMdpm8G
— David Zell (@DavidZell_) March 1, 2022
Jake Chervinsky, the Head of Policy at the Blockchain Association, wrote a lengthy Twitter thread detailing why Russia can’t utilise cryptocurrency to avoid sanctions.
1/ Russia can't & won't use crypto to evade sanctions.
Concerns about crypto's use for sanctions evasion are totally unfounded. They fundamentally misunderstand:
– how sanctions work
– how crypto markets work
– how Putin is actually trying to mitigate sanctions
I'll explain 🧵
— Jake Chervinsky (@jchervinsky) March 1, 2022
According to crypto specialists, Senator Elizabeth Warren’s allegation that Russians can use cryptocurrency to dodge sanctions is untrue, and cryptocurrency is really assisting Ukraine in its struggle against Russia.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.