Crypto Payments May Not Help Russia Evade Sanctions, Experts Say
Russia is preparing to authorize international crypto payments, but people involved in the industry doubt that this will allow the country to circumvent sanctions. At the same time, the United States has been tightening the noose, recently targeting the use of cryptocurrencies to try to circumvent financial restrictions imposed by the West with new legislation in Congress.
Russian Cryptocurrency Experts Claim Circumventing Sanctions With Crypto Is a “Grand Illusion”
This week, Russian authorities announced that they had begun developing a mechanism for cross-border deals with crypto assets, with the aim of reducing sanctions pressure on the Russian economy and trade. The Ministry of Finance said that a draft Law legalizing such transactions was agreed with the Central Bank of Russia.
Moscow is now in a hurry to adopt regulations for the issuance, circulation and various operations of digital currencies, in particular payments for imports and exports restricted by Western sanctions over its invasion of Ukraine. Meanwhile, the House of Representatives of the US Congress approved a new bill with measures aimed at curbing the use of cryptocurrencies that cannot circumvent sanctions.
In this context, experts with knowledge of the industry have shared with the Russian media their opinions on how realistic it is to circumvent sanctions with the help of cryptocurrencies. The cryptocurrency page of the Russian business news portal RBC has collected them in an article, the title of which begins with the expression “Great illusion”.
The introduction of a crypto payment system under sanctions is exactly that, wishful thinking, according to Maria Stankevich, director of development at digital asset exchange Exmo (Exmo.com). She recalled that many state-owned companies were discussing this option in 2014, amid earlier sanctions adopted after Russia’s annexation of Crimea.
This is not the first time Russia has turned to crypto for payments
Mikhail Zhuzhzhalov, a senior attorney at the Tomashevskaya & Partners law firm, agreed with the crypto executive that the idea of overcoming financial hurdles with the help of crypto is not new. In 2018, the Russian authorities considered allowing international companies established in the country’s special administrative regions to use digital currencies in deals with partners, but the proposal was rejected by regulators who had a very negative attitude at the time.
Regulatory pressure is usually brought to bear on institutional players, such as cryptocurrency exchanges, peer-to-peer platforms, and issuers of digital and tokenized assets, Zhuzhzhalov noted. While the circulation of cryptocurrencies itself is unregulated, it is easy to go after licensed companies that operate legally, he noted and emphasized the following:
“If such market participants are subject to hostile jurisdictions, they are required to comply with the sanctions. And if they are located in neutral countries, they may come under pressure from secondary sanctions, as was the case recently with Turkish banks.”
Two of the five Turkish lenders that work with Russia’s Mir cards decided to suspend operations with the payment system widely used by Russian tourists visiting the country. The move followed clear indications earlier this month that Washington would likely impose sanctions on nations that transact with Mir. According to local media reports in Turkey, a new Turkish-Russian payment system is being created.
It is almost impossible to hide large volumes of transactions, Maria Stankevich admitted, and everyone who still wants to work with Russia using cryptocurrencies will be sanctioned. She is convinced that the number of those who choose to continue doing so will decrease. Tracking crypto transactions is even easier than wire transfers, Stankevich added. “Under current conditions, you just have to accept that interaction with the West will be limited,” she concluded.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.