Crypto is helping both sides in the Ukraine war, but it won’t save Russia from sanctions
The bigger issue
There are also questions about how crypto could affect the sanctions regime as a whole, which not only includes restrictions on Russian banks and oligarchs but also afreeze on theUS$630 billion foreign reserves of the Russian central bank.Could Russian institutionsget around these restrictions by using cryptocurrencies?
The problem is not new to this conflict. Countries such as Iran havepreviously been accusedof using bitcoin to bypass sanctions. Nonetheless, as the global community looks ever more fractured by ideology and past grievances, concerns about Russia are of a different order.
In my view, however, it isdoubtful thatcrypto will save Russia from sanctions. Even apart from the huge task of establishing the necessary facilities within Russian banks, many of the people and institutions that would be receiving the crypto would need to set up wallets of their own. Besides that,daily transaction valuesin crypto only amount to a few billion dollars. This is a big number, but an order of magnitude less than the overall financial system. If Russia were to seriously start using crypto for payments, the market is not yet mature enough to cope.
Having said that, it’s worth noting that thanks to the devaluation of the rouble, bitcoin hasnow eclipsed itin overall value. It isnow the 14thmost valuable currency in the world, three places above the rouble.
It is possible that the positives that crypto has brought to this war will be a step towards it becoming more widely accepted and for the world to come up with the harmonized global regulation vital for it to fully reach the mainstream. On the other hand, it is clearly already difficult to prevent crypto from being used as a way of evading sanctions on a relatively small scale, and it has the potential to make it much harder to financially restrict pariah countries in years to come.
Article byGavin Brown, Associate Professor in Financial Technology,University of Liverpool
This article is republished fromThe Conversationunder a Creative Commons license. Read theoriginal article.
Story byThe Conversation
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