INSUBCONTINENT EXCLUSIVE:
Russia may use cryptocurrency to mitigate the impact of international sanctionsThe Russian invasion of Ukraine has attracted widespread and
sweeping sanctions from the West
While the European Union imposed sanctions aimed at "Kremlin interests," the US has announced a wave of sanctions aimed at Russia's banks
and state-owned enterprises, particularly transfers of money through the traditional banking system
Germany and the UK too have announced sanctions targeting the Russian economy
But there is a growing consensus that Russian entities may use cryptocurrency to mitigate the impacts of these sanctions
Many believe that Russian banks and oligarchs could put money into Bitcoin and other cryptocurrencies to evade the impact.To pressure a
country into adhering to international law and its demands, the US often resorts to imposing sanctions, a powerful diplomatic tool, as the
US dollar is the world's preferred reserve currency and the most widely used medium for cross-border payments across the globe
However, US officials also believe the rise of cryptocurrency threatens their dominance and lessens the impact of these sanctions.For
sanctions to be effective, they need the banks and other financial institutions to track the flow of money, so that transactions involving
entities that have been sanctioned can be blocked
However, cryptocurrency allows sanctioned entities to skirt the banking system and thus making tracking of transactions difficult.Supporters
of cryptocurrency often cite this character of the crypto industry to say that it allows an independent way of doing business
But this same feature can now allow sanctioned entities to transact business under the radar.The key to Russia avoiding these sanctions is
to not conduct trade using the US dollar
Russia might have already gamed these scenarios and so is developing its own central bank digital currency (CBDC), a "digital ruble"
There's also the possibility of hacking these digital assets, which would again allow Russian entities to recoup the revenue lost to
sanctions.Cryptocurrency transactions require data to be entered in blockchain, which makes them transparent
It is safe to say that Russian tech experts can develop tools that can hide these transactions long enough to lessen the sanctions' impact.
