Along with the first missiles falling in Ukraine, increasingly stronger economic sanctions began to “fall” on Russia. It was quickly felt by Russian companies and banks, as well as ordinary citizens. Such a drastic shock directed the eyes of Russian citizens to cryptocurrencies. With the beginning of the conflict and the imposition of the first sanctions, did they begin to be used to circumvent international sanctions?
Do cryptocurrencies allow you to bypass economic sanctions?
They can certainly be a sure way to avoid restrictions on value transfer and trade. The cut-off of Russian banks from the SWIFT system had a significant impact on international trade for the entire economy of that country. The next day, Bitcoin’s price rose quite strongly. Also in the following days, it remained stable or increased. Could it be the effect of increased demand from the Russians? Quite possible. Especially since Belarus or North Korea previously used blockchain technology and cryptocurrencies to avoid US sanctions.
Anonymity and transaction encryption as well as decentralization are inherent features of this technology. Unfortunately, they are also ideally suited to the implementation of illegal or bypassing tasks. This was the case quite often when buying weapons or illegal items. Thanks to its anonymity and encrypted transactions, Bitcoin was an ideal means of payment. On the other hand, most Russian companies and institutions have certainly not been able to transfer all transactions and execute them with cryptocurrencies in such a short time. The same was certainly the case with the oligarchs and the richest Russians. Especially that they owned numerous real estates, yachts and cars that were confiscated in the first two weeks of the war.
Have cryptocurrency exchanges helped people under sanctions easily access this market?
Many of the cryptocurrency exchanges operated in the normal way, i.e. after verification, they allowed the user to perform transactions. However, there were also those that blocked accounts and new registrations of users of Russian origin. However, the multitude and availability of encrypted electronic currencies resulted in the fact that, with high probability, many Russian oligarchs and croesuses, determined to protect their assets, fled to this market. The stable growth trends on most of the most famous projects, such as Ethereum (ETH), Ripple (XRP), may be a confirmation. The Terra Luna project was also gaining a lot, which just after the outbreak of the conflict began to go up sharply.
What assets are the sanctioned Russians fleeing to?
Freezing assets, cash, the confiscation of luxury yachts and the real estate of oligarchs associated with Vladimir Putin has been a daily reality in recent weeks. Those of them who were more attentive to encrypted digital currencies certainly moved their assets there. But what about those who had a more indifferent or ambivalent approach to Bitcoin and cryptocurrencies? Some of them could also invest in gold, which always gains value during such events. In a sense, it is anonymous because it can be purchased in a physical form. It is possible that some of the rich in Russia also resorted to other precious metals, such as silver. Will the interest in electronic currencies and precious metals in Russia be ephemeral and will fade quickly after the war? We don’t know exactly that, but it may be so. At this point, however, we can observe a prolongation of the “bull market” on these assets despite the “turning off the tap” with the printing of classic FIAT fiat currencies.
FIAT currency, war, and cryptocurrencies
Most of the FIAT currencies of Eastern European countries have been depreciating in recent weeks. Both Ruble, Hryvnia and Polish zloty. In a hurry, many people bought cryptocurrencies from the market, hoping that they would hold their value more reliably than their native currency. It also happened and it could have been another impulse to increase and maintain the value of individual projects based on blockchain technology. The price of both dollars and Euro was rising in relation to Eastern European currencies. The situation was similar with the so-called with stablecoins such as Tether (USDT) or USDC, which are permanently linked to the US dollar exchange rate.
Escape from sanctions not only through cryptocurrencies.
One of the more common ways for oligarchs and their families to escape sanctions was to transfer property and yachts to the so-called tax havens in different parts of the world. In addition to the most famous ones, such as the Maldives or the Seychelles or Barbados and the Bahamas, Russians also choose very exotic ones, where their property will be even more difficult to find. Among them are, for example, Sint-Maarten, Curaçao, Vanuatu, Antigua and Barbuda and Bahrain with its capital in Manama, as well as the Cook Islands (the capital of Avarua) or even Anguilla. This makes finding some of their property very difficult, not to say impossible.
If you are interested in the subject of cryptocurrencies, exchanges and projects based on blockchain technology, as well as news and interesting facts related to them, be sure to visit the website now https://bitcoin-exchange.uk/