Analysts Warn of Regulatory Risks if Russia Is Able to Use Crypto to Evade Sanctions – Analysts have warned that if Russia is able to utilize cryptocurrency to bypass sanctions, “political support for cryptocurrency in the United States will dwindle, and regulatory risk will rise.”
Some commentators have warned that Russian President Vladimir Putin may use cryptocurrencies to avoid sanctions if the SWIFT global interbank payments system is banned as a result of the country’s invasion of Ukraine.
“We believe Washington is concerned that Russia may employ crypto to escape sanctions,” according to Cowen Washington Research Group analyst Jaret Seiberg. He continued, “
If Russia is able to use cryptocurrency in this manner, we anticipate that political support for cryptocurrency in the United States would dwindle, and regulatory risk will rise.
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Because most global trade is still denominated in dollars, Seiberg believes it will be difficult for Russia to escape SWIFT using crypto.
“Paying with bitcoin necessitates a currency conversion, which allows you to keep track of your transactions. This is also in favor of crypto,” he added.
Analysts believe that if Russia is unable to use bitcoin to bypass sanctions, it will increase the viability of cryptocurrencies in the eyes of regulators.
Political support for cryptocurrency would rise – according to Seiberg, if crypto exchanges helped enforce US sanctions and the government could track evasions using blockchains.
The Cowen analyst warned that “for crypto, this may be the crisis that determines how the government treats its use for payments and as a store of value.”
The trading platforms and wallets would be under pressure. This would not be limited to the United States alone. We believe it would also apply in the United Kingdom, the European Union, and the western allies in Asia.
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Last year, two Russian crypto exchanges were sanctioned by U.S. Department of the Treasury. Suex and Chatex were discovered to have conducted transactions related to ransomware and other criminal activity.
In a report released last year, the Treasury Department recognized cryptocurrencies as a serious danger to sanctions programs. The Treasury Department stated, “We are conscious of the potential that, if left unchecked, these digital assets and payment systems might undermine the efficacy of our sanctions.”