Jake Chervinsky of the Blockchain Association believes politicians shouldn't be worried that Russia might use cryptocurrencies to circumvent economic sanctions, as it wouldn't be feasible on a large scale.
According to crypto policy experts, concerns expressed by high-profile politicians about the possibility of Russia evading economic sanctions using cryptocurrencies are "totally unfounded". In their opinion, the cryptocurrency market is not large enough to support the volumes Russia would need, and that the country's digital asset infrastructure is minimal. Hillary Clinton, former US secretary of state, and Christine Lagarde, president of the European Central Bank, are among the high-profile figures concerned that cryptocurrencies could be used by Russia to circumvent severe financial sanctions imposed for the invasion of Russia. Ukraine. The country has largely been cut off from the SWIFT cross-border transaction system, and businesses in America and other Western countries are prohibited from doing business or transactions with Russian banks and the National Asset Fund. Jake Chervinsky, head of policy at the US Blockchain Association, posted a long thread on Twitter on Wednesday, illustrating how "Russia cannot and will not exploit crypto to evade sanctions."
1 / Russia cannot and will not want to exploit cryptocurrencies to evade sanctions. The concerns about the use of crypto to evade sanctions are totally unfounded. They basically misunderstand: - how sanctions work - how cryptocurrency markets work - how Putin is actually trying to mitigate sanctionsI will explain
Chervinsky stated three reasons why Russia is unlikely to use crypto to circumvent US sanctions. The first is that sanctions are not limited to US dollars, and it is now illegal for any US company or citizen to transact with Russia, reporting, "It doesn't matter whether they use dollars, gold, shells or Bitcoin." The second reason is that the financial needs of a nation like Russia far exceed the current capabilities of the crypto markets, which Chervinsky called "too small, expensive and transparent to be useful for the Russian economy". In other words, even if Russia could access sufficient liquidity, it still could not hide its transactions in such a market. Furthermore, the country has spent years trying to "protect itself from sanctions" but has failed to develop any significant crypto infrastructure or even finalize adequate regulation. Chervinsky said cryptocurrencies simply don't appear to be part of Russia's plans to mitigate the effects of sanctions. “The reality is that Putin has spent years trying to make Russia sanction-proof and crypto is not part of his plan. His strategy included diversifying Russian reserves into yuan and gold (non-crypto), moving trade to Asia (not on blockchain), bringing production onshore, etc. However, on Tuesday, Roman Bieda, head of fraud investigations at blockchain research platform Coinfirm, told Al Jazeera that it would be possible in general to use crypto to "evade sanctions and hide wealth" as North Korea, Venezuela has done. and Iran. But other experts have said Russia's case is different due to the scale of the sanctions, its slow rate of crypto adoption, and lack of volume in the markets. Ari Redbord, head of legal and government affairs at the crypto investigation firm TRM Labs, reported that the transparency of the blockchain is a natural deterrent to evasion of sanctions in such a case. "Russia cannot use crypto to replace the hundreds of billions of dollars that could potentially be blocked or frozen." On February 25, Cointelegraph reported that ECB President Lagarde was eager to get the digital asset markets bill passed by the European Parliament as soon as possible, in order to give European authorities the means to "actually capture crypto asset ". Lagarde suggested that the laws be passed urgently, in order to prevent Russian President Vladimir Putin from potentially being able to evade sanctions with cryptocurrencies. In an interview with Rachel Maddow on MSNBC this week, Clinton urged US President Joe Biden to ban Russia from trading cryptocurrencies. She and Maddow discussed potential national security threats that could relate to cryptocurrency. Clinton finally added: "The Treasury Department and Europeans should pay attention to how to prevent cryptocurrency markets from giving Russia an escape route." "I was disappointed to see that some cryptocurrency exchanges - not all, but some of them - refuse to terminate transactions with Russia due to a certain philosophy of libertarianism." US Senator Elizabeth Warren also took the opportunity on Tuesday to say that US financial regulators should control digital assets, as they could "allow Putin and his cronies to evade economic sanctions."