{"id":8883,"date":"2022-02-24T21:13:57","date_gmt":"2022-02-24T21:13:57","guid":{"rendered":"http:\/\/egrowonline.com\/?p=8883"},"modified":"2022-02-24T21:13:57","modified_gmt":"2022-02-24T21:13:57","slug":"cryptocurrency-is-a-new-tool-for-billionaires-to-avoid-sanctions","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=8883","title":{"rendered":"Cryptocurrency is a new tool for billionaires to avoid sanctions"},"content":{"rendered":"
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The digital currencies might help them buy goods and services and invest in assets outside of Russia \u2014 all while avoiding banks or institutions that adhere to sanctions and could trace their transactions.<\/p>\n
\u201cIf two people or organisations want to do business with each other and are not able to do so through the banks, they can do it with Bitcoin,\u201d said Mati Greenspan, founder and chief executive officer of financial advisory firm Quantum Economics.<\/p>\n
\u201cIf 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.\u201d<\/p>\n
Sanctions workaround<\/h2>\n\n
People protest in front of the Brandenburg gate against the Russian invasion of Ukraine.\u00a0 <\/cite><\/p>\n<\/figcaption><\/figure>\n
Unlike fiat currencies, which need to move through third-party institutions that have the ability to track, freeze or block them, cryptocurrencies can potentially be sent from one person directly to another regardless of any government sanctions or other restrictions.<\/p>\n
Crypto holders can also set up a web of wallets with different addresses across several exchanges, making it extremely difficult to track any activity and even harder to tie transactions back to a particular individual.<\/p>\n
Additionally, they can choose cryptocurrency exchanges that are not based in jurisdictions that are imposing sanctions and therefore don\u2019t necessarily have to adhere to regulations.<\/p>\n
But any assets held in crypto wouldn\u2019t be easily converted into fiat currencies, experts say, making any money that trades hands less disposable. And in order to circumvent banks or even centralised exchanges that adhere to sanctions, individuals would have to convince any services they are doing business with to accept digital payment, which could be difficult.<\/p>\n
The wealthy Russians who will be targeted with sanctions are \u201cpeople that personally gained from the Kremlin\u2019s policies and they should share in the pain,\u201d Biden said on Thursday. \u201cWe will keep up this drumbeat of those designations against corrupt billionaires in the days ahead.\u201d<\/p>\n
None of the billionaires sanctioned prior to Thursday has so far publicly revealed whether they\u2019re crypto holders.<\/p>\n
To be sure, there are still ways for governments to impose regulations on cryptocurrency holdings that exist on centralised exchanges, said David Tawil, president of crypto investment firm ProChain Capital.<\/p>\n
He referred to the recent crackdown by the Canadian government on crypto accounts owned by truckers who were receiving funds to support their blockades of U.S.-Canada border crossings and a weeks-long protest in the capital city of Ottawa.<\/p>\n
Assuming that money laundering is easier via cryptocurrencies is a misconception, said Brett Harrison, president of crypto exchange FTX US.<\/p>\n
He explains that exchanges have access to certain technology that allows for tracking and screening of wallets that come from sanctioned countries. It would also be difficult for individuals to convert cryptocurrencies to fiat currencies through centralised exchanges without getting caught \u2014 essentially making it harder for them to spend.<\/p>\n
\u201cThe thing that can be prevented is the funds forever leaving an exchange where proper sanctions are properly upheld,\u201d said Harrison. \u201cAs soon as it moves anywhere, everyone can see it because it\u2019s on a public blockchain, but even if they could move it, no exchange will let them convert this to a currency and the second they do they are caught.\u201d<\/p>\n
FTX frequently gets contacted by law enforcement agencies across several states and countries with subpoenas to seize funds from certain addresses, he said. The extent to which cryptocurrency can be traceable is visible from the recent arrest of two individuals related to the 2016 Bitfinex hack. The US government was able to track the activity of certain wallets and as a result freeze the accounts as soon as they were converted into fiat currencies.<\/p>\n
Crypto\u2019s status<\/h2>\n
The legal status of cryptocurrencies in Russia is in flux, with the government pushing to permit them in order to attract foreign investment and bring domestic trading out of the shadows, while the central bank says they bear the hallmarks of a pyramid scheme and should be banned. Putin last month ordered them to reach a quick compromise, but top government officials have so far failed to agree on how to regulate crypto.<\/p>\n
But millions of Russians are already immersed in this digital world \u2014 they own more than 2 trillion rubles ($22.9 billion) worth of cryptocurrencies, according to a recent government paper.<\/p>\n
More than 17 million Russians, or about 12 per cent of the total population, are cryptocurrency owners, according to data from Singapore-based payment gateway TripleA. And with more sanctions pending, it could be in Russia\u2019s interest to let rich individuals deal in crypto regardless of its legal status.<\/p>\n
\u201cTo have conflicting thoughts out there is kind of okay and they\u2019ll get to the issue when they can get to the issue,\u201d said ProChain\u2019s Tawil, explaining that even the US has struggled to define the legal framework and regulations surrounding cryptocurrencies. \u201cI would think that the majority of crypto activity in Russia is frankly in rhythm with the government.\u201d<\/p>\n
Other countries around the former Soviet Union are also paying more attention to crypto. Last week, the Ukrainian parliament backed a bill to legalise cryptocurrencies, while Kazakhstan is pushing to better regulate and tax its booming crypto-mining industry.<\/p>\n
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