Following the impositions of new economic sanctions by US, Japan, Australia, etc aimed at isolating Russian institutions from the global financial system, experts are looking to use cryptocurrencies to avoid economic sanctions which result in providing legal status to Bitcoin and other crypto.
Using Cryptocurrencies Replacing US Dollar Would Be A Severe Economic Sanction Violation
Following an escalation of Russian President Vladimir Putin’s unjustified invasion of Ukraine, the US and European sanctions target Russian banks, technology businesses, and aircraft operators – a broad slice of the country’s economy.
According to Leah Wald, CEO of crypto asset management Valkyrie Investments, it is unclear if Russia will use cryptocurrency to avoid sanctions, but “the likelihood of such a pivot is very high.”
According to legal experts, it’s important to remember that utilising digital assets instead of US currency is undoubtedly a violation of the economic sanctions.
The Office of Foreign Assets Control (OFAC) is the main sanctions watchdog in the United States, “takes the view that its sanctions apply to activity conducted in cryptocurrency,” according to Evan Abrams, a sanctions attorney with Steptoe & Johnson.
“They generally would view a transaction conducted in Bitcoin or another asset the same as they would view a transaction conducted in dollars,” Abrams stated.
Russia is All Set to Launch Its Central Bank Digital Currency
Russia can use a variety of cryptocurrency-related technologies to avoid economic sanction. The idea is to find ways to do business without ever utilising US money.
Earlier this month, Russia has already started to establish its own central bank digital currency (CBDC), a “digital ruble” that trade partners may use without converting it into US dollars. Hacking tools such as ransomware can help Russia steal digital money and regain revenue from sanctions.
Cryptocurrency transactions are transparent since they are recorded on the underlying blockchain, but new methods developed in Russia can assist in concealing the origin of these transactions. This would enable other parties to conduct business with Russian firms without being discovered.
Indeed, representatives of Russia’s central bank claimed in October 2020 that the new “digital ruble” would make the country less reliant on the US and more capable of avoiding sanctions.
It would allow Russian enterprises to do transactions with any government or counterparty interested in dealing with digital currency outside of the international banking system.