Experts Say Russia Could Use Crypto to Evade US Sanctions

As the war between Russia and Ukraine continues, it appears that crypto may be a useful tool for Russia to bypass sanctions. On the 24th of February, Russian President Vladimir Putin ordered a military operation in eastern Ukraine. The authorization signals the start of war in Europe over the demand of Russia to end NATO’s eastward expansion. Since sanctions are one of the potent ways countries find their way to impact other countries due to their behavior, America has decided to follow that path with Russia. In addition to the financial measure the US impressed earlier in the week, President Joe Biden has said Russia should expect further sanctions. 

On the 22nd of February, the Biden administration reacted to Russia’s conflict with Ukraine by passing new sanctions. The POTUS intended to prevent Russia from accessing foreign capital by enacting the sanctions. In addition, Ukraine’s central bank has banned the issuance of electric money after Russia’s invasion. The National Bank of Ukraine also ordered the suspension of the foreign exchange market. 

Russia May Bypass Sanctions Using Crypto

However, Russia is preparing to avoid the negative impact of the sanctions through crypto. Experts revealed that Russia is willing to collaborate with anyone around the globe. These entities will then use crypto instead of bank transfers. 

This action is similar to the step Russia took in 2014 when the US imposed some sanctions on the country. At the time, the United States barred its citizens from conducting businesses with Russian banks after the invasion of Crimea. The US also stopped Americans from doing business with oil and gas developers and other companies. As a result, economists estimated that the sanctions by the Western countries cost Russia $50 billion annually. 

Some believe that Russia has considered crypto to be its way out ahead of the sanctions. A former prosecutor who now acts as the head of anti-money laundering and sanctions practice at Washington law firm Ferrari & Associates, Michael Parker, said:

“Russia has had a lot of time to think about this specific consequences. It would be naive to think that they haven’t games out exactly this scenario.”

The US government used sanctions as a diplomatic tool since the USD is used globally and serves as the world’s reserve currency. As such, all Russia needs to do is explore ways to trade without using the USD. Additionally, experts have revealed that the country has a lot of crypto-related tools to escape sanctions. 

Russia is one of the countries working earnestly in developing its CBDC. The Russian government hopes that its digital ruble will be acceptable during trade by other countries without initially converting it to dollars. Despite that crypto transactions are recorded on blockchains, Russia has developed new tools to mask the origin of such transactions. This new tool will permit foreign businesses to privately trade with Russia.