Analysts are convinced that Russia may utilize cryptocurrency to avoid sanctions recently imposed due to its attack on Ukraine.
What Will Russia Do with Crypto?
Last week, the U.S. imposed sanctions on Russia for its invasion of Ukrainian territory, but many industry experts believe that these sanctions aren’t going to go anywhere, and that Vladimir Putin could potentially turn to digital assets to avoid whatever’s been imposed on his nation by the American government. Matthew Sigel – head of digital assets research at Van Eck – explained in an interview:
Neither dictators nor human rights activists will encounter any censor on the bitcoin network.”
Sanctions similar with what’s being placed on Russia have also been placed on nations like North Korea and Venezuela in the past, and in both instances, it appears these nations used crypto – or at least tried to use crypto – to bypass limitations they were facing. They also employed tactics such as ship-to-ship transfers of fuel, though crypto-based maneuvers became somewhat common in both territories.
Mati Greenspan – founder of Quantum Economics – says that the bitcoin network could easily allow two parties to conduct business without third parties snooping. He commented:
If two people or organizations want to do business with each other and are not able to do so through the banks, they can do it with bitcoin. If a wealthy individual is concerned that their accounts may be frozen due to sanctions, they can simply hold their wealth in bitcoin to be protected from such actions.
The idea is that banks and the money they store can be frozen or cut off in some way, whereas bitcoin and anything stored on blockchain will not be subjected to these rules. However, there are some analysts out there who say this is not true. In addition, it would also be very difficult for a sanctioned country to convert crypto into regular fiat if there were limits placed on that country’s monetary system.
Wallets Are Being Watched
Brett Harrison – president of crypto exchange FTX.US – says exchanges have access to technology that allow them to track the movement of assets and the activities of their users. They would therefore be able to tell which money was coming from a sanctioned country, and they could then cut off transactions as necessary. He says:
The thing that can be prevented is the funds forever leaving an exchange where proper sanctions are properly upheld. As soon as it moves anywhere, everyone can see it because it’s on a public blockchain, but even if they could move it, no exchange will let them convert this to a currency, and the second they do, they are caught.
He further commented that his exchange is regularly contacted by law enforcement agencies throughout America regarding the stoppage of specific funds that stem from or are being moved to wallets under investigation.