Cryptocurrency experts say the concerns expressed by high-ranking politicians about Russia’s avoidance of economic sanctions with the help of cryptocurrency are “completely unfounded.”
They say the crypto market is not big enough or deep enough to sustain the volume Russia needs, and that the country’s digital asset infrastructure is minimal.
Former US Secretary of State Hillary Clinton and current European Central Bank President Christine Lagarde are among high-ranking officials worried that the cryptocurrency could provide a means for Russia to circumvent the heavy financial sanctions imposed on its invasion of Ukraine.
The country is largely cut off from the SWIFT cross-border transaction system, and businesses in the United States and other Western countries are banned from doing business or doing business with Russian banks and the National Welfare Fund.
The head of the policy in the promoter of the crypto policy of the Blockchain Association in the USA Jake Chervinsky published a long Twitter the end on March 2, explaining how “Russia cannot and will not use cryptocurrency to evade sanctions.”
1 / Russia cannot and will not use cryptocurrency to avoid sanctions.
Concerns about the use of cryptocurrencies to avoid sanctions are completely unfounded. They are fundamentally misunderstood:
– how sanctions work
– how crypto markets work
– how Putin is actually trying to ease sanctionsI will explain
– Jake Chervinsky (@jchervinsky) March 1, 2022
Chervinsky cited three reasons why Russia is unlikely to use cryptocurrency to circumvent US sanctions. The first is that sanctions are not limited to US dollars, and it is now illegal for any American business or citizen to make deals with Russia. He said“It doesn’t matter if they use dollars, gold, seashells or bitcoins.”
The second reason is that the financial needs of a nation like Russia far exceed the current capabilities of the crypto markets that Chervinsky Called “Too small, expensive and transparent to be useful to the Russian economy. In other words, even if Russia had access to sufficient liquidity, it would still not be able to hide its transactions in such a market.
Finally, the country spent years trying to “prove sanctions”, but failed to build any significant crypto infrastructure or even finalize crypto regulations. Chervinsky says cryptocurrency simply does not appear to be part of Russia’s plans to mitigate the effects of the sanctions.
“The reality is that Putin’s years have been trying to protect Russia from sanctions, and cryptocurrency is not part of his plan. His strategy included diversifying Russia’s reserves into yuan and gold (not cryptocurrencies), redirecting trade to Asia (not the blockchain), bringing production to land, and so on.
However, Roman Bieda, head of fraud investigations at the Coinfirm blockchain research platform, told Al Jazeera on March 1st that it was generally possible to use crypto to “avoid sanctions and hide wealth,” as has been done. from North Korea, Venezuela, and Iran.
But other experts told the publication that Russia’s case is different due to the scale of sanctions, its slow pace of cryptocurrency adoption and lack of market depth.
Ari Redboard, head of legal and government affairs at cryptocurrency investigator TRM Labs, said blockchain transparency was a natural deterrent to sanctioning the avoidance of sanctions in this case.
“Russia cannot use cryptocurrency to replace hundreds of billions of dollars that could potentially be blocked or frozen.
Cointelegraph reported on 25 February that ECB President Lagarde was eager for the cryptocurrency markets (MiCA) bill to be passed by the European Parliament as soon as possible to give the European authorities funds so that “cryptocurrencies can actually be captured. Lagarde called for urgent policies to prevent Putin from evading cryptocurrency sanctions.
In an interview with Rachel Madow on MSNBC this week, Hillary Clinton called on US President Joe Biden to ban Russia from trading in cryptocurrencies. She and Madou discussed threats to national security that could exist with regard to cryptocurrency, and Clinton said:
“I was disappointed to see some of the crypto exchanges, not all, but some of them refuse to stop transactions with Russia by some philosophy of libertarianism.”
Related: European Parliament postpones vote on cryptocurrency bill due to proof of work
Democratic Sen. Elizabeth Warren also took the opportunity on March 1 to condition that US financial regulators should check digital assets because they risk “allowing Putin and his associates to avoid economic pain.”