With the European Union, the United States, and other nations placing financial sanctions on Russia, there have been fears that people and organisations in the country may turn to cryptocurrency to avoid the restrictions.
The US Treasury Department said on March 1st that recent sanctions on Russia would include checks on digital currency. Additionally, the White House recommended big cryptocurrency exchanges abstain from doing business with sanctioned organizations.
The government says it will pursue anybody who violates Russia’s sanctions, including via the use of digital currencies, in an executive order set to be announced later today.
The executive order comprised the following: “All property and interests in property that are in the United States, that will come into the United States in the future, or that are or will come into the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in… deceptive or structured transactions or dealings to circumvent any United States sanctions, including the use of digital currencies or assets or the use of physical assets.”
Since the invasion of Ukraine started last week, nations have slapped sanctions on Russia. According to a weekend agreement, “certain Russian banks” would be removed from the international financial transaction system SWIFT, and the US will now implement sanctions on Russia’s central bank and other revenue sources.
Bloomberg reports that the White House has requested verification from major cryptocurrency exchanges that their systems cannot be used to bypass Russian sanctions.
As a consequence, Russians will have restricted access to foreign currency, stifling economic growth and further isolating the nation. The fresh wave of sanctions follows Russia’s invasion of Ukraine, which resulted in fighting in Kyiv and its environs.
It comes after Ukraine’s deputy prime minister, Mykhailo Fedorov, requested in a tweet over the weekend that cryptocurrency exchanges restrict Russian customers.
No Exchanges Are Planned
Exchanges are not entirely supportive. While Binance has said that it would not “unilaterally” freeze all Russian customers’ accounts, it has cautioned that it will restrict accounts of Russian clients targeted by sanctions.
According to a spokeswoman for the world’s biggest cryptocurrency exchange, crypto is “meant to increase financial independence for individuals worldwide” and a blanket ban would “fly in the face of the reason crypto exists.”
Coinbase, another well-known exchange, has also declined to put a blanket ban on all Russian addresses but has declared that it will adhere to the limits.
Jesse Powell, the CEO of Kraken, said on Twitter that the business “cannot freeze the accounts of our Russian customers without a legal mandate.”
With inflation predicted to increase in Russia, the ruble’s value is likely to deteriorate further, driving Russians to seek other currencies. In Ukraine, residents have been sighted utilising bitcoin and the popular stable coin tether in response to the hryvnia’s decline and the ban of electronic money transactions.
Russia has been a vocal backer of cryptocurrencies, contributing to around 12% of the worldwide market. This has fueled suspicion that crypto may be used to bypass constraints.
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