As sanctions rain on Russia, following the Kremlin’s decision to invade Ukraine, media reports have suggested that they are unlikely to limit the country’s access to crypto assets. While the Russian elite may use them to circumvent restrictions, ordinary Russians are also likely to keep trading digital coins on foreign platforms.
Cryptocurrencies considered a potential tool for Russian billionaires circumventing sanctions
US and European sanctions, imposed in response to Moscow’s military assault on Ukraine, threaten the ability of Russia and its elites to do business in dollars and euros. However, as the country recently chose a path toward cryptocurrency regulation, sanctions may carry less weight, Bloomberg noted in a report.
Digital currencies such as bitcoin, often traded on decentralized platforms, could become an effective instrument to circumvent the restrictions. According to Matthew Sigel who heads digital assets research at investment manager Vaneck, “neither dictators nor human rights activists will encounter any censor on the Bitcoin network.”
Russian billionaires, those who have already been targeted, can potentially use cryptocurrency to evade sanctions, the article notes. Through anonymous transactions, digital coins can offer them the opportunity to purchase goods and services and even invest in assets outside the Russian Federation and avoid banks. Mati Greenspan, CEO of financial advisory firm Quantum Economics, said:
If a wealthy individual is concerned that their accounts may be frozen due to sanctions, they can simply hold their wealth in Bitcoin in order to be protected from such actions.
Along with the ability to spend and send coins directly, crypto holders can also transfer funds through multiple wallets and use exchanges based in jurisdictions that do not adhere to restrictions. The same goes for companies in sanctioned countries. For example, Iran is considering allowing the use of cryptocurrencies in international settlements for similar reasons.
Exchanges Are Not Denying Russians Access to Crypto, Russian Media Says
One of the proposed measures is to cut Russia off from Swift, the global interbank payments system. According to Artem Deev, head of the analytical department at Amarkets, such a move is unlikely to affect individual cryptocurrency users. Commenting for RBC Crypto, he expressed his opinion that Russia’s regulatory decisions will have a bigger impact.
In another report, the outlet quotes an unnamed representative of an international crypto exchange who said digital asset exchanges were unlikely to impose restrictions on their Russian users in the wake of tougher sanctions. against Russia. The source clarified:
It will not affect individuals, it will be negative for businesses, especially for exporters and importers.
“Crypto exchanges are decentralized organizations, so they don’t meet US and EU sanctions requirements,” added Tatiana Kosykh, an attorney at law firm Advocate Premium.
Meanwhile, representatives of Currency.com, the crypto exchange founded by Belarusian tech entrepreneur Viktor Prokopenya, told RBC that the platform does not plan to ban customers from Russia or other countries, despite the current conflict in Ukraine. They believe that most other exchanges, except those based in the U.S., will follow the same route.
