Skip links

Do crypto assets help Russians evade sanctions?

Do crypto assets help Russians evade sanctions?

Tiger in Moscow
Crypto has become popular due to its decentralized nature and, for many people, is considered a hedge against the risks associated with regular fiat currencies. However, recent developments regarding war in Ukraine and sanctions on Russia have put crypto platforms in a critical light. This article will discuss whether crypto assets are helping Russians evade sanctions. Allegedly, Russia is now considering accepting Bitcoin as a valid payment method for oil and gas export. In addition, friendly countries could be permitted to pay in cryptocurrency. Earlier this week, Vladimir Vladimirovich Putin stated countries opposed to him are obliged to pay using the ruble, which has lost over 20 percent of its value since the beginning of the war.

Decentralized finance

DeFi, also known as decentralized finance, is a groundbreaking financial system built on securing distributed ledgers, which are similar to ledgers used by cryptocurrencies. Ledgers register users and owners anonymously and keep track of balances, purchases,and sales within their system. People created decentralized finance to remove the influence of banks, governments and financial institutions on the value of a currency.

How does the price of Bitcoin go up?

Cryptocurrency can gain value on trading platforms. Its value rises in response to supply and demand within the market. The supply of coins determines the supply of cryptocurrency and the number of current owners willing to sell their currencies. Many factors influence demand for a cryptocurrency, such as the value of the coins. Proper demand means that if the crypto monetary system functions effectively, smart contracts become more familiar, and if more businesses begin to embrace Bitcoin, the need for crypto will rise. Furthermore, there is a rising demand for cryptocurrencies as a store of value. Bitcoin is as valuable as the public perceives it to be.

Why would Russians buy crypto?

Sudden drops in the ruble have Russian citizens worried about their retirement savings and inflation is now expected to reach 20 percent before the end of 2022. Now that sanctions appear to be fully in force, Russia’s outflow of cash is primarily suspended as PayPal, Visa, and Mastercard suspended all payment traffic to and from Russia. Naturally, Russians are now looking to alternative investments to protect their wealth against the steep drops of the ruble and cryptocurrencies seem to be the most popular choice. Experts argue that NATO is to blame for this, as Russians are offered no other option. In addition, sanctions only truly work if currency handling is truly limited. Crypto might very likely be throwing Russians a lifeline. Moreover, Russian banks are testing the digital ruble, which could help the ruble retain some of its value without external factors messing with its valuation. The launch is timed for early 2022.

Are Russians actually buying crypto to evade sanctions?

While it’s true that we cannot track which individuals are buying crypto, it is possible to see how many Bitcoins trade for the Russian ruble. Of course, Bitcoin is not the only cryptocurrency available to the public, but it is the most well-known crypto. Information from Coin Dance, a primary Bitcoin statistics provider, shows that spending on Bitcoin respective to the ruble has surged by 260 percent since the beginning of the Ukrainian war. Surging prices of Bitcoin relative to the ruble means it’s highly likely that crypto is serving as a hedge against the drastic fall of the ruble and Russians might be able to evade sanctions by purchasing crypto.
This website uses cookies to improve your web experience.