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Russia is unlikely to budge in face of US sanctions. Cryptocurrency has its back
Back in 2014, when Russia invaded Crimea, the United States imposed financial sanctions against Kremlin. All the business with Russians was barred. America took tough action which included barring Russian banks, oil and gas developers, blocking assets under American jurisdiction, etc. Russia witnessed a tremendous financial loss of around US$50. Eight years later, with a booming cryptocurrency market, Russia seems to be not taking sanctions and impending threats seriously.
Though digital tokens were present back then, the reason behind Russia’s newly gained confidence is cryptocurrency’s popularity. It has become so vogue that world leaders are surprised to see Russia’s war advances in Ukraine in spite of world sanctions. EU has imposed strict sanctions and America has targeted Russia’s traditional system of money transfer. Germany and the UK also have imposed strict restrictions on the Russian economy. Russia, with its silence, is baffling many experts. They have come to a conclusion that Russia might have plans to use Cryptocurrency, especially the central bank’s digital currency, as an alternative source of finance.
It is evident that Vladimir Putin, the President of Russia, can very much leverage cryptocurrency to support the war he unleashed on Ukraine. However, the dynamics of crypto-economics have a lot more to add to the drama. Initially, the US and its politicians have lent their support to digital tokens as their citizens started to accept it as a medium of asset building and value exchange. Now that it is being used to evade war sanctions, it might undergo a new phase of scrutiny, and might dethrone the decentralized medium.
On the other hand, if Russia is vetoed out of the SWIFT global interbank payments system, it can have a tough time doing Crypto transactions as most of the global trade is still dollar-dominated. However, Kremlin can still save its face by making the maximum out of central bank digital currency. The path for crypto’s credibility clearly hinges on the decision cryptocurrency exchanges would want to take. If they can help in withholding sanctions against Russia, the decentralized medium would gain new streaks of viability. Lest Russia would intensify its crypto transactions inviting some pessimism towards cryptocurrencies from world leaders.
Besides, a week ago, the Russian finance ministry said that it had submitted draft legislation regulating cryptocurrency in the country. It includes identifying the user and imposing a cap on investment.
Cryptocurrency, the way around US sanctions
The Western countries have been using ‘Sanctions’ as a tool to jeopardize Russia’s economy for a long time. Since the US dollar is the reserve currency, it is most widely used as the medium of exchange and cross-border payments across the globe. But with cryptocurrency gaining ground in the digital ecosystem, the US dollar is losing its dominance.
The recent Russian sanction was also imposed with a motto to stagnate Kremlin from accessing the global financial system, especially banks and other central authorities from providing enforcement. But to evade the embargo, Russia might use cryptocurrency-related tools. They will start embracing digital tokens to conduct trade without using the US dollar. On the other hand, Russia is also strengthening its hold on the central bank digital currency (CBDC). It will help Kremlin use it with trade partners without having to cover the money to US dollars. Meanwhile, cryptocurrency mining in Russia has also increased despite the growing regulations and the threat of to ban. Recently, cryptocurrency hacks from Russia have also increased drastically. The West is wondering if Kremlin is using hacking techniques to recoup revenue lost to sanctions.
Russia to regulate Cryptocurrency circulation
Russia is currently gambling the usage of cryptocurrency as it hasn’t come out with a master plan. On one hand, they are benefitting from digital tokens as the US imposes strict sanctions against the country. It will also attract foreign investment and bring domestic trading out of the shadows. On the other hand, Russia is planning to ban or at least regulate cryptocurrency.
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