The Sanctions against Russian Banks Also Affect the Financial Situation of Venezuela

Alexander Salazar
-
0
The Sanctions against Russian Banks Also Affect the Financial Situation of Venezuela

Clients from Venezuela could refuse to interact with accounts in Russian banks. The sanctions would push Russia to look for clients in the oil market that Venezuela currently serves.

The economic sanctions on Russia due to the attack against Ukraine place Venezuela in a difficult position. The close financial relationship between the two countries could hamper the international trade of the latter.

Public opinion reacted to the partial removal of Russian banks from the SWIFT (Society for Worldwide Interbank Financial Telecommunications) system.

Experts in economics and finance warned about the obstruction of the financial structure with which the Venezuelan government evades its sanctions. The specialists said it relies primarily on Russian banks, while President Nicolás Maduro stated that his country does not depend on the SWIFT system.

The Sanctions on Russian Banks Affect Venezuela

In 2019, the United States sanctioned the Central Bank of Venezuela and state-owned oil company PDVSA. That led the government of Maduro to design an operation to continue collecting oil bills and paying suppliers through the Russian financial system.

Economist José Guerra warned that Venezuela had accounts in different Russian banks to receive payments for oil exports. The specialist said that PDVSA sent money from Russia to the Swiss, French, and German financial systems to pay international suppliers.

Venezuela could be operating with a Russian bank not excluded from the SWIFT system. However, the expert warns that banks in the European Union might not receive transactions from Russia for fear of sanctions. He added that that would disrupt the current financial transactions of Venezuela.

Asdrúbal Oliveros, director of consulting firm Ecoanalítica, noted Russia was the primary supplier for cash US dollars and euros for Venezuela. He explained that could hinder the provision of cash, the payments by the Executive, and the sales of foreign currencies to contain the exchange rate.

The moves by the Venezuelan government aim to drive the domestic market, paralyzed by the hyperinflation that started in 2017.

Russia Could Compete with Venezuela for the Asian Oil Market

Luis Oliveros, a specialist in international finance and oil trade, said the sanctions against Russia could affect Venezuela in two other ways.

The expert explained that sanctions had forced Venezuela to sell oil at a discount to create purchase incentives. That means that their selling price of the non-renewable resource is lower than international markets indicate.

Even though the discount reached 50% in 2020, that indicator reflected a recovery in 2021. Analysts believe the close relationship between Russia and Venezuela could cause the price of Venezuelan oil to drop to levels of two years ago. In other words, the country cannot benefit from the increase in oil prices caused by the conflict between Russia and Ukraine.

Oliveros also pointed out that the drop in oil production and the sanctions led the country to lose many markets. The expert explained that Venezuela practically sells only to Asian countries like China.

He said that Russia could not sell oil to most of its traditional clients, including the United States and countries of the European Union. For that reason, it will have to turn to the Asian market, taking space away from Venezuelan oil.

Finally, Luis Oliveros said that president Nicolás Maduro is an open and direct supporter of Vladimir Putin. He explained that this situation could drive away possible buyers for Venezuelan oil that do not want to deal with Russia.

By Alexander Salazar

New Regulations on Cryptocurrencies Will Prevent Russia from Using them to Its Benefit

Alexander Salazar
-
0
New Regulations on Cryptocurrencies Will Prevent Russia from Using them to Its Benefit

The G7 is preparing regulations to prevent Russian people and organizations from using Bitcoin and other cryptocurrencies. The United States has already issued its first regulation to sanction Russia due to the attacks on Ukraine.

The United States and the European Union (EU) seek to regulate Bitcoin and other cryptocurrencies to prevent Moscow from using them to its benefit. Their objective is to block the access of the Russian government to the platforms related to the industry.

The idea of regulating cryptocurrencies during the conflict between Russia and Ukraine gains traction in the US and Europe. Jerome Powell, the chairman of the Federal Reserve (Fed), recently addressed the issue in the US Congress.

Senators Elizabeth Warner, Mark Warner, and Jack Reed, alongside Senate Banking Committee chairman Sherrod Brown, wrote to Janet Yellen. They asked the Secretary of the Department of the Treasury to explain their actions on cryptocurrencies amid sanctions against Russia.

The senators have expressed their concern about the war situation between Russia and Ukraine. They stated the financial entities of the Eurasian nation are preparing to circumvent the sanctions against them through a variety of cryptocurrency-related tools.

The New US Measures against the Access to Cryptocurrencies by Russia

The Office of Foreign Assets Control (OFAC) of the Treasury Department issued the Russian Harmful Foreign Activities Sanctions Regulations.

That set of rules will allow the United States to take action against transactions with cryptocurrencies by the banned Russian entities. It also encompasses deceptive or structured transactions or dealings with cryptocurrencies to evade US sanctions.

The US president introduced a measure to prevent exchanges from helping sanctioned Russian people and organizations use cryptocurrencies as an escape valve.

Europe Also Plans to Block the Use of Bitcoin in Russia

The EU also discusses measures to block the use of cryptocurrencies in Russia. Since international sanctions are seriously affecting the economy of the Eurasian country, the European branch of Sberbank is likely to go bankrupt.

Bruno le Maire, French Finance Minister, said the EU wants to prevent Russia from circumventing imposed sanctions through cryptocurrencies.

The ruble (RUB) price fell by 24% against the US dollar in 7 days. The total circulation of the value of the Russian fiat currency is lower than the market capitalization of Bitcoin.

Christian Lindner, the Finance Minister of Germany, stated the G7 is studying taking other measures to avoid unregulated cryptocurrencies. He said that they were also working to do it in the context of the German presidency of the G7.

Lindner said that the sanctions by Europe and the United States emerged after Ukraine requested support to corner Russian cryptocurrency users. In addition, he urged cryptocurrency exchanges to block all their customers from Russia inside and outside the Eurasian nation.

During the conflict, the price of Bitcoin has increased more in Russia and Ukraine than in other countries. The cryptocurrency is trading at around USD 40,902 and has accumulated a 6.6% gain in the last week, according to CoinGecko.

By Alexander Salazar

The United States Considers Several Spanish-Speaking Countries Launder Money with Cryptocurrencies

Alexander Salazar
-
0
The United States Considers Several Spanish-Speaking Countries Launder Money with Cryptocurrencies

The United States criticizes the adoption of Bitcoin as legal tender by El Salvador and its regulatory framework on it. They also believe that a growing number of criminals use crypto assets to launder money in Spain.

The US Department of State assessed some Spanish-speaking countries whose laws and authorities allegedly allow money laundering with cryptocurrencies.

Argentines Use Cryptocurrencies to Evade Taxes

The report from the US government agency states that Argentina does not ban or regulate cryptocurrencies like Bitcoin (BTC) firmly. They point out that most existing regulations relate to fiscal information and regimes.

The United States said that Argentine citizens adopted cryptocurrencies expecting to evade taxes and have increased their use. In 2021, the Central Bank and the Securities Commission of Argentina warned about the risks of digital assets.

Colombian Institutions Need to Understand Cryptocurrency Transactions Better

Although Colombia has a rigorous money laundering detection regime, the US State Department believes not all those systems are aligned with the best risk management-based practices.

The Colombian authorities confirmed that criminal groups increasingly use cryptocurrencies to send drug proceeds to Colombia. However, the institutions of that South American country do not understand virtual financial transactions much.

The US Believes the Salvadoran Adoption of Bitcoin Was Too Hasty

The United States has heavily criticized El Salvador following its adoption of Bitcoin as legal tender on September 7th.

The US authorities believe the enactment of the Bitcoin Law happened too hastily. They consider that the Central American government should have developed further regulations to prevent money laundering and terrorism financing.

Peruvian Criminals Move Part of their Illicit Funds through Cryptocurrencies

The US Department of State stated that Peru had faced challenges in enforcing and implementing its anti-money laundering regime. In that regard, they said that part of the existing illicit funds in Peru move through cryptocurrencies.

The government agency indicated that cryptocurrency-related financial technology is growing in Peru. The Financial Intelligence Unit of the Andean country published a risk analysis of Bitcoin and other cryptocurrencies in 2021.

There Is Illegal Cryptocurrency Mining in Venezuela

The United States said that Venezuela distinguishes itself by its rampant illicit financial activity and endemic public corruption.

They consider Venezuela lacks government action against corruption, which favors money laundering and financial crimes with cryptocurrencies.

Criminals Increasingly Launder Money with cryptocurrencies in Spain

The US government agency recognized that Spain proactively identifies, assesses, and understands its money laundering vulnerabilities and works to reduce the risks.

They highlighted that criminals in Spain are increasingly using cryptocurrencies to launder their transactions. They also invest their Illicit profits in real estate, services, communications, cars, works of art, and finance.

More Illicit Activities Involve Fiat Money Than Bitcoin

A report from Chainalysis indicates that criminals have laundered more than USD 33,000 million worth of cryptocurrencies since 2017. That figure is insignificant compared to generalized data on money laundering with fiat.

According to the UN, criminals launder between USD 800 billion and USD 2 trillion with fiat money like US dollars and euros every year. That is equivalent to about 5% of global gross domestic product (GDP).

The international organization also estimated money laundering represented 0.05% of the volume of cryptocurrency transactions during 2021.

By Alexander Salazar

Bitcoin Renews the Path of Digital Gold Amid the conflict in Eastern Europe

Jenson Nunez
-
0
Bitcoin Renews the Path of Digital Gold Amid the conflict in Eastern Europe

The trading volume of bitcoin in rubles increased four times due to the Russian attacks. In the last month, against a 14% appreciation of bitcoin, S&P 500 crumbled down at least 6%.

The recent changes the markets suffered amid the attacks led by Russia in Ukraine have caused various effects on the bitcoin and cryptocurrency environment compared to traditional markets.

While the bitcoin market’s first response to the Russian attacks over Ukraine was a bit somber, differences appeared between those environments, along with their usual differences between them and other conventional values. This divergence favors the argument that describes bitcoin as a haven asset and could take advantage of an increase in its price.

This Tuesday, various indicators highlighted some views about the divergence between bitcoin and the S&P 500 index, representing the behavior of such shares of the top standard companies and entities.

The correlation between BTC and the S&P 500 index has slightly fluctuated from 0.35 in mid-December to a high peak valued at 0.55 last week. A decay valued at 0.45 appeared to show less integration between bitcoin and other standard stocks.

In 2021, the correlation between bitcoin and the S&P 500 went through adverse fluctuations. However, as of the end of January 2022, the correlation increased. While the bitcoin price increased recently, the S&P 500 faced decay, and the correlation between the two went through unfavorable fluctuations.

On January 30, a maximum of the mentioned correlation of 0.8 made an entrance. On February 24, the correlation presented an unfavorable fluctuation; various parameters presented divergent behavior from the variables involved in the study.

Bitcoin Keeps a Prudent Distance from Standard Assets

A report made by Kaiko explained that the correlation of a currency like bitcoin with Nasdaq and S&P 500 approached its maximum worth, an equal worth this asset came to experience back in July 2020. Bitcoin also harmonized its recent growth with a rebound in commodities or strengthening its features regarding a store of value.

The reversal of this situation between bitcoin and conventional stocks reached a relevant point because of the Russian attacks over Ukraine. The financial punishments led by countries, including the US against Russia, caused a growth in implementing bitcoin in that nation. At the same time, this cryptocurrency is quite helpful in Ukraine when it comes to receiving money as donations from other parts of the world.

Both nations in the conflict describe bitcoin as a haven asset to boost their financial power and as a method to store their value during this difficult time. Binance data shows the daily volume in the Bitcoin-ruble pair (BTCRUB), which is usually down the $5 million and approached a new high peak on February 24, marking almost $18 million.

By: Jenson Nuñez

New Cryptocurrency Regulations in South Africa: What the Experts Say

Audy Castañeda
-
0
New Cryptocurrency Regulations in South Africa: What the Experts Say

As part of a series of amendments to South African financial laws, crypto-asset service providers have turned into responsible institutions. The South African treasury announced further crypto regulations “to be finalized during 2022.”

The announcement implies that the proposed changes will ensure that, “any person who provides advice or brokerage services related to crypto-assets must be recognized as a provider of financial services under the law and must comply with the requirements of the law.”

Two Contrasting Experts

This issue has caused contrasting opinions from the experts. For example, Marius Reitz, the general manager of crypto platform Luno for South Africa, shed light on the changes, commenting that, “crypto players believe they welcome regulation,” further adding that, “regulation is a vital part of the cryptocurrency ecosystem.”

Reitz told Cointelegraph, “The regulation will make it easier for the public to distinguish between licensed and unlicensed crypto service providers and find a safe place to store and buy their crypto.”

However, for Hermann Viver, the founder of Bitcoin Ekasi, a South African project inspired by Bitcoin Beach, it is a different story. He told Cointelegraph that, “Stricter KYC and AML rules push already marginalized people further to the fringes of society. And, ultimately, “authorities can address the situation with a one-size-fits-all solution, which for many, turns out to be no solution at all.” absolute solution.”

Vivier told Cointelegraph, “Ideally, there should be a threshold where people earning below a certain level don’t require compliance/verification, because really, if, for example, that threshold was $330/month, what possible harm can a person do with that amount?”

The South-African Authorities’ Position

South African authorities have previously warned big players like Binance not to operate in the country. Elsewhere, Unathi Kamlana, the commissioner of the South African Financial Sector Conduct Authority, spoke out on protecting vulnerable crypto investors.

In other developments, the Treasury report alludes to “risks posed by so-called stablecoins,” which will be addressed later this year. In southern Africa, plans for central bank digital currencies (CBDCs) are public and widely debated. Ultimately, a CBDC is a way for governments to manage money flows more effectively, in contrast to private stablecoins like Tether (USDT).

The Treasury’s decision to tighten “money laundering and terrorism risk financing controls through crypto-assets” comes as no surprise to Bitcoin Ekasi and other members of the South African cryptocurrency industry.

It is worth noting that in June last year, the South African Intergovernmental Fintech Working Group (IFWG), under the aegis of the Crypto Assets Regulatory Working Group, laid out a roadmap for introducing a regulatory framework that will center on crypto asset service providers. This happened because of the country’s change in its initial national policy toward crypto, characterized as one of wariness but also noninterference

Since then, IFGW remains concerned about the manipulative nature of much crypto marketing material, assets’ price volatility, and fraud activities.

Some Conclusions from the Experts

For Luno, “a notable aspect of the SA Reserve Bank’s approach is to include the industry in its discussions from the beginning.” The situation for Reitz is clear, stating, “The regulation will also boost the number of formal partnerships between banks and cryptocurrency companies, which will facilitate greater adoption of cryptocurrencies.”

Reitz is convinced that South Africa may “see more CBDCS launch in 2022” as South Africa is “investigating a digital currency”. The CBDC could provide a “comfortable space for regulators”.

By Audy Castaneda

The Venezuelan National Institute of Civil Airlines, INAC, Authorizes the Use of Petro to Pay for Flight Services

Audy Castañeda
-
0
The Venezuelan National Institute of Civil Airlines, INAC, Authorizes the Use of Petro to Pay for Flight Services

For the payment of airport services with said Venezuelan cryptocurrency, Sunacrip (National Superintendence of Crypto Assets and Related Activities) has arranged several platforms.

The National Institute of Civil Airlines, INAC in Venezuela, reported in a statement that as of February 23, clients, service providers and suppliers of this institution would be able to use the “Petro” cryptocurrency in airport platforms and commercial activities.

According to the statement issued by the civil aeronautical entity, this measure complies with the directive of the President of the Republic of the Nation, Nicolás Maduro Moros, regarding the establishment of the payment with the national cryptocurrency (Petro), of all the services provided by INAC.

“Thus, INAC users have a fast, easy and secure platform to pay with Petro for procedures corresponding to the aeronautical sector, demonstrating the conviction of continuing to bet on national development,” INAC said in its statement.

It is worth considering that the Simón Bolívar International Airport (Caracas, CCS), one of the most important in the country, has been working since 2021 to add the cryptocurrencies Dash, Bitcoin, and the national digital currency Petro to its payment system, in association with Sunacrip.

Usability Guarantees

The start-up of the payment in Petro for the aeronautical management procedures before the INAC is the result of the efforts of the Venezuelan State to guarantee the usability of its sovereign crypto-asset.

This takes into account that on December 20, 2021, a professional team from INAC, together with Sunacrip, carried out the evaluation of technical details about El Petro, and its implementation within the payment systems of Venezuela’s aeronautical services.

Using Petro in Venezuela, as the Russian-Ukrainian Crisis Develops

We must remember that the cryptocurrency issued in Venezuela is, according to the government of Nicolás Maduro, the first launched by a State, although countries such as Estonia and Dubai have already stated that they also have similar plans.

In addition, the government resorts to it as a source of financing at a time when its income has fallen due to low production and the reduction in oil prices, the main and almost only source of foreign currency inflows into the country.

Compared to Bitcoin, the Venezuelan government acts as an intermediary, while Bitcoin is completely decentralized. In other words, Bitcoin does not belong to anyone; no governments, banks, or investment funds regulate it.

The government of Venezuela, with income problems, in the midst of a serious crisis and pressured by the financial sanctions of the United States, launched the petro and promotes it as a solution to be able to finance itself and solve the many ills that plague its economy.

Among the objectives has been to create an alternative currency to the dollar and a digital and transparent economy for the benefit of emerging countries and away from the world financial system, controlled by the United States.

Back in 2018, Time magazine, citing among its sources an executive of a Russian state bank, asserted that senior Kremlin advisers participated in the creation of the Venezuelan petro and that Russian President Vladimir Putin himself gave the green light to the initiative.

However, the Russian Ministry of Finance denied any involvement of the country’s authorities with the creation of the petro.

Amid these considerations, and given the harsh consequences that the Russian-Ukrainian conflict has brought about in financial terms, it is an ugly truth that wars have devastating costs for all, no matter how closely involved they might be.

International markets have assumed that the situation between Russia and Ukraine is about a regional conflict and not a world war. Regarding sanctions, the effect, according to analyst Gustavo Godoy, can be twofold. On the one hand, there would be an increase in the price of some items due to Russian isolation. On the other hand, the measures could slow world trade.

The natural thing is to look for escape routes, and resort to cryptocurrencies as “protection”, just as with gold in past times.

Nevertheless, the petro has not achieved such status. Based on what has been happening with cryptocurrencies once the Russian-Ukrainian war broke out, the tendency is to see Bitcoin as a growth asset, an optimistic view that the petro does not enjoy, given its direct connection to the Venezuelan government.

By Audy Castaneda

1...879880881...1,654Page 880 of 1,654