Can Russia bypass International Sanctions using Cryptocurrency?

Last month, the invasion of Ukraine sparked a wave of repressive measures against Russia. These penalties further alienate it from the international systems of financial and banking transactions.

Some cryptocurrency exchanges, however, escape international sanctions, especially if they do business in non -participating countries, said Daromir Rudnyckyj, professor of anthropology at the University of Victoria, who heads the new laboratory for cryptocurrency. study of currency changes, the Counter Currency Lab.

Russians can use digital wallets to exchange their rubles for virtual currency, such as bitcoin, and conduct their transactions by avoiding the punitive measures adopted against them.

The G7 countries and the European Union, aware of the problem, have also sought solutions to prevent the scenario from happening.

Vladimir Putin at a meeting of his cabinet via videoconference on Wednesday

Photo: The Canadian Press/AP/Mikhail Klimentyev

Limited use

If this scenario were possible, Daromir Rudnyckyj believes there is little chance that the use of cryptocurrencies would be such as to weaken the sanctions adopted by Western countries.

This digital money is still often used as a way to save rather than as money, he says. However, he reminded us that this trend could change.

On a global scale, if we are talking about trading oil or wheat, buying electronic chips, these important transactions, it is very difficult to do them now.he says.

Russians are unlikely to convert their rubles into cryptocurrency to buy their bread or mineral water. »

A quote from Daromir Rudnyckyj, Director of the Counter Currency Lab at the University of Victoria

Despite its meteoric growth, the cryptocurrency system remains smaller than the traditional financial system, added Simon Dermarkar, associate professor at HEC Montreal.

When we talk about the billions and billions held by the Russian oligarchy, to say that it can convert all its totals held almost everywhere on the planet into cryptocurrency, overnight, almost impossible.he said.

No platform is willing to issue such an amount of cryptocurrencyhe continued.

Rescuers were standing in the rubble.

Rescuers and firefighters continue to search for survivors of the collapse of a kyiv shopping mall hit by Russia’s strike on March 21, 2022.

Photo: Reuters/Thomas Peter

Also helped Ukraine

However, the Ukrainian conflict will restore the image of the cryptocurrency and Ukrainians have also benefited from it since the beginning of the war, two experts said.

After invading the country, Ukraine’s Vice President Mykhailo Fedorov urged the international community to support his people with cryptocurrency donations on Twitter.

The online platform set up for this purpose by the Ukrainian government has raised more than 60,000 US dollars (75,000 Canadian dollars) in digital currency.

bypass seriousness common banking systems, kyiv was so quick to raise money to finance bullet-proof vests, for example, affirms Simon Dermarkar.

Some leaders [ukrainiens] even taught the fact that in a few minutes, we get totals in the world of cryptocurrencies that can take several days before arriving in the traditional banking systemhe continued.

A description with bitcoin tokens, binary code, and a hand.

Cryptocurrency payments are ideal for fraudsters because transactions are difficult to trace.

Photo: Getty Images / Cemile Bingol

Call for more control

The potential of cryptocurrency and how to fix it to prevent fraud has been discussed for years, says Simon Dermarkar. Companies involved in cryptocurrency migration are also aware of this, he said.

Controlling the cryptocurrency system is difficult because the system is designed to keep anonymity users, directed by Mykhailo Fedorov. However, he added that it is not impossible.

You don’t completely cover your tracks in cyberspace. »

A quote from Mykhailo Fedorov, director of the Counter Currency Lab at the University of Victoria

Following Western sanctions, some of these platforms have raised their voices and integrated these measures into their systems. In particular, they blocked access to their funds to some individuals affected by the sanctions, Simon Dermarkar said.

While it is still possible to conduct cryptocurrency transactions without going through these conversion platforms, this process is complicated and not very accessible, according to him.

A broader framework for cryptocurrencies around the world should see the light of day, he says. However, it would be wise to ensure that these policies do not harm the good side of this market, according to him.

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