How cryptocurrencies could help Russia vitiate the U.S. sanctions
As the world watched Russia's invasion of Ukraine, the Biden administration pledged to impose harsh economic sanctions on the warring nation. The European Union, United Kingdom, Germany, Canada, Australia, and Japan also imposed sanctions on Russia in an attempt to thwart any future attacks.
This might be easier said than done as the country plans to use cryptocurrency to bypass these measures, according to a report by The New York Times published on Thursday.
This is bound to make a bad situation even worse.
“Russia has had a lot of time to think about this specific consequence,” Michael Parker, the head of the anti-money-laundering and sanctions practice at the Washington law firm Ferrari & Associates, said to The New York Times. “It would be naive to think that they haven’t gamed out exactly this scenario.”
Basically, Russia is planning on making deals around the world with anyone sketchy enough to ignore the country's recent actions and continue profiting from them. The nation plans to use digital currencies to bypass the control points that governments rely on.
“Neither dictators nor human rights activists will encounter any censor on the Bitcoin network,” Matthew Sigel, head of digital assets research at investment manager VanEck, said to Bloomberg.
This is because cryptocurrencies use blockchain technology to keep transactions anonymous. Therefore Russia could use digital currencies to buy goods and services outside of the nation while avoiding the banks or institutions that adhere to and reinforce Biden's newly-imposed sanctions.
“If two people or organizations want to do business with each other and are not able to do so through the banks, they can do it with Bitcoin,” Mati Greenspan, founder, and chief executive officer of financial advisory firm Quantum Economics, said to Bloomberg.
“If a wealthy individual is concerned that their accounts may be frozen due to sanctions, they can simply hold their wealth in Bitcoin in order to be protected from such actions.”
The question now becomes: will there be anyone willing to do deals with Russia? The whole world seems to be in agreement that the country's invasion is wrong but nevertheless dubious characters can be found that place money over justice. Time will tell how this plays out.