Russia bets on cryptocurrencies despite sanctions.
The US FinCEN (Financial Crimes Enforcement Network) recently put financial institutions on notice to try to control possible sanctions evasions that Russia faces. After the increase in the intensity of the conflict in the invasion of Ukraine, cryptocurrencies seem to be playing a fairly active role in the economy of the country ruled by Putin. Despite the sanctions imposed by Europe and the United States, transactions continue to increase.
According to information from Cryptopolitan, as both the Russian ruble and the Ukrainian hryvnia have lost much of their value, numerous transactions have taken place between these coins and certain cryptocurrencies on Binance.
The research agency Kaiko, which deals with various problems between Russia and Ukraine, suggested that many people affected by the war had bought the USDT currency from Tether with the aim of avoiding devaluation.
According to Kaiko, it is possible that Russia will continue to increase the volume of these operations, mainly with the aim of evading the sanctions that are affecting the country’s economy. The ruble fell immediately after the first attacks on Ukraine, and its value continued to plummet in the following days. Despite this, cryptocurrency operations were fraught with volatility, and in the case of Bitcoin, it lost up to 11% of its value at the beginning of the month.
Thus, the aforementioned United States Financial Crimes Control Network (FinCEN) issued an alert to North American financial institutions to monitor any attempt to avoid the sanctions imposed after the Russian offensive.
The agency also warned foreign exchanges to remain vigilant for transactions carried out under jurisdictions with poor anti-money laundering regulations.
Coinbase Actions to Prevent Russian Cybercrimes
Meanwhile, the Coinbase platform has blocked around 25,000 virtual wallets of Russian users who allegedly carried out illicit activities. These users, around 0.2% of the exchange, relate to Russian individuals or entities involved in suspicious activity. The company claims to have identified them through its own investigations into cybercrimes in Russia.
Coinbase stresses that it fully supports sanctions as an intervention by government authorities. As far as the company is concerned, it explains that the compliance program consists of three steps. First, they block access to sanctioned accounts, detect evasion attempts, and finally, anticipate potential threats. Paul Grewal, the chief legal officer of Coinbase, argues that digital assets can offer sanctions advantages over fiat money. This is mainly because thanks to Blockchain technology, they can trace digital asset transactions; therefore, there is a permanent record, and they are public.
In addition, Coinbase underlines the fact that they are financial instruments with a relatively incipient use, which makes their use to evade sanctions less likely “The Russian Government and other sanctioned actors would need practically unattainable amounts of digital assets to significantly counter-current sanctions.”
Actions by Other Cryptocurrency Companies
Other cryptocurrency companies have begun taking steps to deter the use of cryptocurrencies based on sanctions recommended by the United States government. For example, Satoshi Labs, a Prague-based provider of cryptocurrency wallets, announced that it would stop shipping cryptocurrency wallets to Russia. Satoshi Labs representative Kristýna Mazánkov said that although Bitcoin (BTC) is apolitical, they have decided to restrict the delivery of crypto wallets to Russia because “company employees have connections to the conflict that make it personal.”
On the other hand, the New York State Department of Financial Services (DFS) announced the implementation of a Blockchain-based technology to reinforce ongoing global sanctions and to help identify Russian individuals and entities linked to DFS-licensed virtual currency businesses.
By Audy Castaneda
