Statements by ECB President Christine Lagarde calling cryptocurrencies a “threat” to global security appear to contradict real-world data and expert opinion.
European Central Bank President Christine Lagarde has reiterated warnings that Russian individuals and companies are using cryptocurrencies to circumvent sanctions.
However, as of March 18, daily trading volume for ruble-denominated cryptocurrencies was just $7.4 million, down more than 50% from recent figures and a high of $70 million reached on March 7, according to data from Chainalysis.
This amount represents a small portion of the total volume of the global cryptocurrency market, since the total daily volume of Bitcoin usually fluctuates between $20 billion and $40 billion.
Lagarde’s Warnings in Detail
In a presentation at the Bank for International Settlements Innovation Summit on Tuesday, the crypto-skeptic Lagarde said that European financial authorities had seen that “ruble volumes in stable, in cryptocurrencies, right now [is at] the highest level that we’ve seen since maybe 2021.”
Lagarde did not single out the Russian government, stressing that, it was mostly Russian individuals and companies, which were turning to cryptocurrencies. However, she said that cryptocurrencies are “certainly being used as a way of trying to circumvent sanctions.”
Lagarde chimed in, “So is cryptocurrency a threat? Yes. Has it been a threat in the past? Yes, because when you look at a lot of the dubious transactions that are taking place, a lot of the criminal activity payments that are taking place, very often we can find some crypto assets involved.”
Other Views: Kaiko and Chainanalysis
Lagarde’s comments appear to be at odds with the data provided by Chainalysis and Kaiko, as well as with expert opinion. Jake Chervinsky, from the Blockchain Association, has said that Russia is unlikely to use crypto assets as a method of circumventing Western sanctions.
Data provided by crypto analytics firm Kaiko showed that ruble-to-USDT volume is down 86% from its peak of $38 million on March 7 to below $5 million on March 22. There was a spike in the run up to the war and spikes after, but volumes have returned to lower levels than seen for most of early February. That was before there was the imposition of sanctions.
On the contrary, cryptocurrencies are playing a role in helping Ukrainian refugees to flee the country. CNBC told the story of a Ukrainian refugee using the pseudonym “Fadey” who fled the war-torn nation with $2,000 worth of Bitcoin in an offline wallet, making it much easier for him to access his monetary assets once he got to safety in Poland.
Alex Gladstein, chief strategist at the Human Rights Foundation, said that trying to withdraw money from Ukrainian banks in the weeks leading up to the invasion was incredibly difficult, and highlighted the difficulties faced by refugees currently trying to access their funds from countries like Poland.
Donations made to Ukraine via crypto assets have skyrocketed in the last 3 months, with total daily donations made to Ukraine now standing at $100.9 million, according to data from Merkel Science. Without these, a significant number of people trying to escape from the conflict would have probably died in pursuit of their freedom.
By Audy Castaneda
