President Biden’s ‘devastating’ sanctions on Russian banks and elites may be bypassed via crypto

“If a wealthy individual is concerned that their accounts may be frozen as a result of sanctions, they can simply hold their fortune in Bitcoin,” Mati Greenspan explained.

In reaction to Russia’s attack on Ukraine, US President Joe Biden issued penalties that did not include cutting Ukraine off from SWIFT payments or bitcoin transfers.

Biden said the US and its allies and partners will be enforcing sanctions intended at exacting “devastating costs” on Russia as a result of “Putin’s war of choice against Ukraine,” according to a White House release on Thursday. The United States’ financial system will be severed from Russia’s largest bank, Sberbank, and “complete blocking sanctions” would be imposed on VTB Bank, Bank Otkritie, Sovcombank OJSC, Novikom bank, and their subsidiaries, according to US President Donald Trump. As part of the sanctions imposed on Russia, Biden highlighted some privileged citizens who had “enriched themselves at the expense of the Russian state.”

However, in response to European authorities, Biden told reporters on Thursday that the economic sanctions would not include shutting Russia off from the SWIFT network, which is a global payments system. Allowing Russians to use this option and appearing to be unable to restrict Bitcoin transfers could potentially reduce the impact of any penalties imposed by the US and its allies.

According to a Bloomberg storey published on Thursday, Russian oligarchs might theoretically avoid US sanctions by purchasing products and services with cryptocurrency and continuing to invest in countries where the invasion has had a more severe economic impact. Individuals in Iran were able to seek crypto donations for flood victims in 2019 while being subject to US sanctions, and Venezuelan President Nicolás Maduro proposed a measure in 2020 to use crypto to circumvent various restrictions imposed on the country.

“If a wealthy individual is concerned that their accounts may be frozen as a result of sanctions, they can simply hold their wealth in Bitcoin to avoid such acts,” said Mati Greenspan, founder and CEO of Quantum Economics.

Ukraine’s foreign minister, Dmytro Kuleba, has argued that Russia should not be permitted to continue using the SWIFT network. President Biden stated that the sanctions imposed on the five Russian banks “would have an equal, if not greater, impact than SWIFT,” but that cutting Russia off from the network would be considered “as a possibility” if necessary. Neither Biden nor Kuleba addressed the potential role of cryptocurrency in circumventing sanctions.

Biden’s efforts came after reports that Russia had launched an invasion of Ukraine, attacking a military airport near Kyiv and firing missiles at targets across the country. Biden appears to be going after Russia both economically and militarily with the increase of US soldiers to Germany and Poland in response to the attack.

However, according to a research published by the New York Times, sanctions may not have the desired effect.

“Russia has had a lot of time to consider this precise effect,” said Michael Parker, a former federal prosecutor. “It would be naive to believe they haven’t played out this scenario in detail.”

Although the situation in Ukraine is still unfolding, the attacks have had a financial impact on crypto and traditional markets. Following news of the invasion, the price of Bitcoin (BTC) plummeted into the $34,000s on February 24, but has since recovered to trade above $38,000 at the time of publication.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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