Russia-Ukraine conflict has led to a global economic turmoil. Economies like the United States, Canada, United Kingdom, and European Union have announced several sanctions targeting Russia and its central bank. Many economists believe Cryptocurrencies can help Russia in evading economic sanctions , but is it true?
Need of Crypto Sanctions against Russia?
US Senator Elizabeth Warren urged financial regulators to implement tighter regulations against Russia as the threat of crypto adoption by the country is on a surge.
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 U.S. and EU banned several Russian banks from the SWIFT system, a debate over ‘Russia using Crypto to evade the Sanctions’ has broken out. However, many crypto experts believe that the possibilities of this happening are baseless.
One of the major reasons cited is that the crypto market isn’t huge or sufficiently enough to support the volume that Russia needs.
Why even Crypto can’t save Russia?
It is very unlikely that Russia will be able to find shelter under crypto to evade the restrictive sanctions. The Bitcoin Policy Institute published research on how Bitcoin is both enhancing Western pressure on Russia and helping Ukrainians to raise funds amid the crisis. The analysis depicts that Bitcoin or any other alt-coin won’t be able to save Russia from these implied sanctions.
Key-points
- The report explains how the world’s largest cryptocurrency (Bitcoin) is far away to replace the dollar and the euro as trade currency.
- Russia attempting to sell their goods in cryptocurrencies will over-stress its high volatility which will eventually make it hard for them to manage their commodity revenues.
- As per reports, Russia’s annual exports before the war was around $400 billion which is not even half of Bitcoin’s current market capitalization ($836 Billion).
- Major cryptocurrency exchange platforms strict compliance with U.S sanctions regimes. Thus, it is difficult for the violators to hide their transactions with bitcoin or other cryptocurrencies.
- Cryptocurrency exchanges are highly responsive to blacklist designated addresses and non-compliant 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, Head of Policy at Blockchain Association, posted a long Twitter thread explaining the reasons supporting why Russia can’t use crypto to evade sanction.
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 sanctionsI’ll explain 🧵
— Jake Chervinsky (@jchervinsky) March 1, 2022
As per crypto analysts the claims by U.S. senator Elizabeth Warren claims that Russians can use crypto to evade sanctions is false and crypto is actually helping Ukrainian’s in their fight against Russia.
