Russia Will Not Use Cryptocurrency to Circumvent Sanctions

Politicians should not be concerned that Russia will use cryptocurrency to circumvent economic sanctions because it is not feasible at the scale required. They claim that the crypto market is neither large nor deep enough to support the volume required by Russia; the country’s digital asset infrastructure is inadequate.

European Central Bank President Christine Lagarde is among the high-profile figures concerned that cryptocurrency could allow Russia to avoid harsh financial sanctions imposed in response to its invasion of Ukraine.

Chervinsky outlined three reasons why Russia is unlikely to use cryptocurrency to circumvent US sanctions. The first is that the sanctions don’t apply only to USD; it is now illegal for any US business or citizen to do business with Russia at all. It doesn’t matter if they use dollars, gold, seashells, or Bitcoin.

The second reason is that a country’s financial needs far outweigh the current capabilities of crypto markets; Chervinsky described it as “too small, expensive, and transparent to be useful for the Russian economy”. In other words, even if Russia had access to sufficient liquidity, it would be unable to conceal its transactions in such a market.

On February 25, Cointelegraph reported that ECB President Lagarde was eager to pass the Markets in Crypto Assets (MiCA) bill in the European Parliament as soon as possible to give European authorities the means to “catch crypto-assets”. Lagarde is pushing for the policies to pass quickly to prevent Putin from potentially evading sanctions with crypto.

Hence, the Treasury Department and Europeans should work hard. Their main goal is to figure out how to keep crypto markets from providing an escape route for Russia.