As the U.S. and its allies aim to cripple Russia<\/a> through sanctions for invading Ukraine, there has been some speculation around whether Moscow could gain leeway through cryptocurrencies, which are typically based on decentralized networks and don\u2019t rely on any central authorities to maintain.<\/p>\n The sanctions target Russia\u2019s central bank, some state-owned companies and elite families, and include measures that remove some Russian banks from SWIFT, a payments-related messaging service based in Belgium that helps banks world-wide execute financial transactions.\u00a0 <\/p>\n Such restrictions aim to limit Russia\u2019s access to financial markets, as SWIFT plays a dominant role in financing international trade, covering more than 11,000 institutions in over 200 countries<\/a> around the world. It will be more difficult for Russian individuals to import, export or invest abroad. <\/p>\n Read more:<\/strong> \u2018Selected\u2019 Russian banks to be removed from SWIFT global banking network, as sanctions against Moscow grow<\/a><\/p>\n The ability to move cash through crypto would \u201cdefinitely be some level of buffering,\u201d Rance Mashek, president and founder of trading platform iVest+ told MarketWatch in an interview.\u00a0<\/p>\n \u201cUnless the Russian companies are on the sanctions list, we can\u2019t see anything that would keep a US-based company from paying a Russian company through crypto to just transact,\u201d Mashek said.<\/p>\n Ari Redbord, head of legal and government affairs at blockchain intelligence firm TRM Labs, echoed the point, saying that \u201cthere is no question in my mind that Russia will attempt to use cryptocurrency to launder funds and evade sanctions.\u201d\u00a0<\/p>\n However, \u201cit\u2019s very, very hard to do at scale,\u201d said Redbord, who once worked as a\u00a0senior adviser to the undersecretary for U.S. terrorism and financial intelligence. \u201cThe liquidity is just not there,\u201d Redbord said. The war is likely to \u201crequire billions of dollars and it is very hard to off ramp billions of dollars of crypto.\u201d<\/p>\n \u201cThey will find ways to do it. It just can\u2019t be in the huge amounts that would come anywhere near replacing or getting close to replacing what they\u2019re essentially losing with the sanctions that have been imposed,\u201d Redbord said. <\/p>\n Russia exported $332.2 billion worth of merchandise<\/a> in 2020, and imported $240.4 billion worth of goods, according to data by the World Trade Organization. Russia\u2019s central bank holds $630 billion reserves<\/a> made up by deposits and assets in the world\u2019s major currencies.\u00a0<\/p>\n Bitcoin\u2019s total market capitalization stands at $790 billion on Monday, while the whole crypto market capitalization is $1.85 trillion, according to CoinMarketCap. <\/p>\n \u201cWhat Russia will likely do is to attempt to use cryptocurrency in much smaller amounts to evade sanctions. And they will need on-ramps and off-ramps from traditional currencies to traditional currencies, and they will need exchanges to do that,\u201d Redbord said.\u00a0<\/p>\n \u201cThe larger cryptocurrency businesses where most of the liquidity exists, have compliance controls in place,\u201d Redbord said.\u00a0<\/p>\n The Biden administration is reportedly asking crypto exchanges<\/a> to ensure that Russian individuals and businesses aren\u2019t using cryptocurrencies to avoid U.S. sanctions, according to Bloomberg, citing people with direct knowledge of the matter.<\/p>\n Binance, the world\u2019s largest crypto exchange, is reportedly blocking the accounts of any Russian clients targeted by sanctions<\/a>, Reuters reported.\u00a0<\/p>\n Sam Bankman-Fried, chief executive at crypto exchange FTX, wrote on Twitter that \u201cwe are already complying with international sanctions to prevent evasion, and will do so whether or not it\u2019s mandated.\u201d<\/p>\n Still, Russia may turn to decentralized exchanges and some exchanges without ties to the West, Redbord noted. Russia has over 340 total virtual asset service providers<\/a> such as crypto exchanges and over-the-counter brokers, according to TRM\u2019s research.\u00a0<\/p>\n The European Union should move quickly to pass crypto regulation that prevents Russia from evading sanctions, European Central Bank President Christine Lagarde said on Friday. <\/p>\n Though new regulation might take time to pass and become effective, the Russia-Ukraine war could be \u201ca\u00a0wake up call for governments globally, to get a better grip on what\u2019s going on with crypto on the regulatory front,\u201d Mashek said.\u00a0<\/p>\n BitcoinExchange\u2019s role\u00a0<\/strong><\/h6>\n
A wake-up call for regulation?\u00a0<\/strong><\/h6>\n
\n BTCUSD,
\n +3.75%<\/a>
\n rallied 16% during the past 24 hours to around $43,729. The S&P
\n SPX,
\n -0.24%<\/a>
\n 500\u00a0closed down by 0.2% on Monday. <\/p>\n<\/p><\/div>\n<\/div>\n