Following President Joe Biden’s announcement of tougher sanctions against Russia on Thursday, speculation grew as to whether crypto transactions could enable Russia circumvent US financial restrictions.
Biden announced sanctions against Russia’s two largest banks as well as the country’s affluent elites. While the move effectively excludes them from the US financial system, cryptocurrency may provide a viable alternative.
He did not, however, prohibit Russia’s access to the SWIFT network, a major cross-border financial system. Russians still have access to the international banking system. Biden did not discuss whether crypto could circumvent sanctions in his remarks last night.
According to a Bloomberg article, banned Russians could utilize cryptocurrency to circumvent US economic sanctions. Governments currently have no way of prohibiting non-custodial cryptocurrency wallets.
The adoption of cryptocurrency could potentially mitigate the effects of recent sanctions.
More than 30 wallets linked to the trucker-led “Freedom Convoy” were recently blocked by the Canadian government, which used emergency powers. However, those wallets were all held in trust, and government regulation could only go as far as crypto-to-fiat exchanges.
Nonetheless, the crypto community slammed Canada’s decision. Crypto advocates also urged users to switch to non-custodial wallets in order to evade regulation.
In Russia, cryptocurrency acceptance is also rapidly increasing. According to the authorities, Russians own at least $200 billion in cryptocurrency, accounting for 12% of the total market. The Finance Ministry recently proposed a measure to recognize and regulate cryptocurrency as a traded asset in the country. The Central Bank, on the other hand, is in opposition to this move.
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