Will Russia Adopt Crypto in the Event of a SWIFT Blockade?
The Trust Project is a global partnership of news organisations dedicated to developing transparency standards.
With the United States and other countries imposing sanctions on Russia’s financial system and the potential of the country being removed from the SWIFT payments network, there may be a shift to Bitcoin and other crypto-assets.
President Joe Biden of the United States of America vowed a wave of penalties on Russian banks and financial entities on Feb. 24. He added that after discussions with G7 leaders, there was unanimous support for a coordinated campaign to isolate Russia from the global economy by denying its access to key currencies.
“We will impose restrictions on Russia’s capacity to transact in dollars, euros, pounds, and yen in order to remain a member of the global economy. We’re going to restrict their capacity to do so.”
Along with the penalties, the country’s withdrawal from the SWIFT payments network is being examined. This will restrict the capacity of foreign banks to transfer cash to Russian banks.
Boris Johnson, the British Prime Minister, lobbied “quite hard” to have Russia banned from SWIFT, while Ukraine’s foreign minister, Dmytro Kuleba, tweeted:
“Anyone who now questions, whether Russia should be barred from Swift, must realise that their hands will also be stained with the blood of innocent Ukrainian men, women, and children. REDUCE RUSSIA’S ACCESS TO SWIFT.”
Make the switch to Bitcoin
SWIFT is a Belgian corporation that is utilised by over 11,000 banks and financial institutions worldwide. It processes over 42 million messages daily. It has lately come under fire for being a sluggish, costly, and out-of-date method of money transmission, yet it continues to be the industry standard.
There are fears that Russia’s exclusion from the global payment system may drive it closer to China in creating its own system.
If Russia want to circumvent these onerous limitations, the adoption of cryptocurrencies such as Bitcoin is ripe for the taking. Matthew Sigel, head of research for digital assets at investment management VanEck, stated:
“On the Bitcoin network, neither dictators nor human rights campaigners will face censorship,” Bloomberg reports that Russian millionaires and oligarchs may potentially migrate to cryptocurrency in order to circumvent banking blockades. Mati Greenspan, CEO of Quantum Economics, added: “If a rich person is worried about their accounts being blocked as a result of sanctions, they may simply keep their money in Bitcoin to avoid such acts.”
Achieving independence from USD hegemony
Cryptocurrencies may be transmitted directly between individuals without the intervention of banks, centralised payment networks, or third-party middlemen. As BeInCrypto revealed on Feb. 24, Russia has a sophisticated crypto toolkit that it may use in such situations.
Sahil Bloom, vice president at Altamont Capital Management, said that a withdrawal from SWIFT might have “longer-term second-order consequences for Bitcoin and other non-fiat currencies,” before adding:
“Russia may strive to mitigate the effect of the limitations by using its in-house system in conjunction with a drive away from the USD reserve currency hegemony.”
Cryptocurrency markets have fallen 6% since the start of the week, and $200 billion was wiped away on the day the Ukrainian incursion started.