How Crypto May Help Russia And Its Billionaires Go Around Sanctions
ndtv.comThe legal status of cryptocurrencies in Russia is in flux.
Cryptocurrencies may help Russia and its billionaires blunt the impact of western sanctions.
U.S. President Joe Biden said Thursday he has authorized “strong sanctions” in response to Russia's invasion of Ukraine. These aim to limit its ability to do business in dollars and other major international currencies, and include penalties on five Russian banks that represent an estimated $1 trillion in assets. A broad swath of Russian elites and their family members will also be targeted. That's all in addition to penalties that were imposed earlier this week.
But those sanctions might carry less weight in a country that is taking steps to legalize cryptocurrencies and where the digital assets are already widely owned. Typically, nations employ physical workarounds to avoid sanctions, such as Venezuela and North Korea's use of ship-to-ship transfers of fuel, but digital assets like crypto and decentralized exchanges could become the most effective way to circumvent penalties.
“Neither dictators nor human rights activists will encounter any censor on the Bitcoin network,” said Matthew Sigel, head of digital assets research at investment manager VanEck.
Sanctions imposed on companies and individuals by the U.S. and its allies could essentially close them out of the West. Billionaires, some of whom have already been targeted directly, potentially stand to circumvent those penalties if they choose to use crypto, which uses blockchain technology to keep transactions anonymous. The digital currencies might help them buy goods and services and invest in assets outside of Russia — all while avoiding banks or institutions that adhere to sanctions and could trace their transactions.
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