Ukraine gains an odd friend in its campaign to deny Russia access to crypto: The Central Bank of Russia
Both nations seem to want crypto to be prohibited in Russia in light of the country’s recent war operations.
Ukraine has called for “sabotage” of regular Russians’ crypto assets in response to the two nations’ continuing conflict. Among others, Russia’s European allies have expressed growing fear that Russia may utilise cryptocurrency to circumvent Western sanctions.
Ironically, it looks as if the Central Bank of Russia, or CBR, is one of the strongest proponents of prohibiting ordinary Russians and financial institutions from using cryptocurrency. As local news site tass.ru reported on Thursday, the CBR has maintained its stance of advocating a ban on cryptocurrency issuance, mining, and circulation in the Russian Federation. According to a CBR official:
“Currently, the Central Bank maintains the stance that was previously declared and published on the central bank’s official website. As a result, there is nothing more to say today.”
Typically, during times of war, governments must significantly boost their expenditure, including via the creation of new money, in order to pay for their military endeavours. This, however, results in runaway inflation, compelling citizens to swap their native currencies for foreign currencies (including, more recently, cryptocurrency) in order to secure their investments.
However, this would exert significant selling pressure on the local currency, hence increasing exchange rates and impeding war finance efforts. As a consequence, governments often impose severe currency restrictions during times of conflict, as Russia and Ukraine have already done. Thus, the disadvantages of crypto undermining the Ruble and, indirectly, impeding Russia’s war efforts may exceed the benefits of adopting crypto to circumvent sanctions.
According to research issued this week by Arcane Research, the daily volume of Tether (USDT) to ruble trade on Binance has hit a record high of $35 million. Russian social media users seem to be very worried about the ruble’s declining value and how cryptocurrencies may help them save their investments. Roman Buchyn, a user, wrote:
“You need to purchase something [cryptocurrencies]; the ruble is rapidly approaching the price of toilet paper.”