Russia Could Use Bitcoin To Bypass Western Sanctions After Invasion
Following up on this morning’s article highlighting the potential effect of the intensification of the attack by Russian forces in Ukraine, Russian troops formally set foot on Ukrainian soil on Thursday in one of the most daring annexation attempts in history, marking a months of speculation about an invasion ended and a ton of sanctions against Russia by NATO and its allies were unleashed.
With cryptocurrencies increasingly seen as an alternative safeguard against fiat-induced economic woes, one need look no further at how Russia will view digital assets during the current tensions with NATO.
The first wave of sanctions came from the US on Monday after the President of the United States issued an executive order that reads as follows: “Block certain persons’ property and prohibit certain transactions” after Russia resisted calls to back off from its attempts to undermine the sovereignty and territorial integrity of Ukraine.
This after Putin tried to recognize the so-called Donetsk and Luhansk People’s Republics (DNR and LNR) as “independent” states and to send troops to these regions. This morning, EU leaders pledged to agree on the toughest sanctions package we have ever implemented in an attempt to get Putin to step down.
President Putin, however, does not seem deterred by his annexation efforts and pledges to keep the ball rolling. This boldness is attributed by some to Russia’s recent dealings with cryptocurrencies, especially Bitcoin, which could serve as a shield against sanctions imposed on the country.
According to the New York Times, “Russian companies have many cryptocurrency tools at their disposal to evade sanctions, including a so-called digital ruble and ransomware.”
“When the United States banned Americans from doing business with Russian banks, oil and gas developers and other companies in 2014 after the country’s invasion of Crimea, the blow to the Russian economy was swift and immense. Economists estimate that sanctions imposed by Western countries cost Russia $50 billion a year.
Since then, the global market for cryptocurrencies and other digital assets has exploded. That’s bad news for sanctions executors and good news for Russia.
Unlike other nations, Russia has a friendly tone when it comes to cryptocurrencies. President Putin’s recent move to accelerate the creation of a legal and financial framework for Bitcoin has been interpreted as preparing for sanctions by the west after his planned actions in Ukraine.
Russia is also the third largest Bitcoin mining country, with a recent report from Bloomberg showing that the citizens of the country own cryptocurrencies worth more than $214 billion, which is about 12% of the total value of the global economy. crypto assets.
With such a huge chunk of cryptocurrencies in their hands, experts believe that Russia will maneuver the sanctions imposed on it sufficiently, given that cryptocurrencies are unauthorized. Russia could also gain support from other nations, including Iran and China, some of which have fallen under US sanctions.
In addition, a recent report from the Center for a New American Security shows that cryptocurrencies can mitigate the effects of US sanctions by allowing nation-states to transact without involving the global banking system.