The Russo-Ukrainian war started in the second month of 2014, following the Ukrainian Maidan revolution. it initially focused on the status of Donbas and Crimea, internationally recognized as parts of Ukraine.
In the same month of 2022, Russia responded with a full-scale invasion of Ukraine. Much of the international community has condemned Russia’s actions for violating international law and invading another country.
Following this, most of these countries including the USA and Canada have imposed economic sanctions against Russia, its citizens, and its economy as well as Belarus for its cooperation and assistance to Russia.
‘Crypto Can’t Be Used To Avoid Sanctions And Hide Wealth…’ Or Can It?
According to experts, the case with Russia is different. These same sanctions against Russia have left the country with limited wiggle room, making it difficult to use the crypto and its decentralized nature to their advantage.
Russia as a country has suffered a heavy blow as a result of these sanctions. This blow remains heavy because before their invasion of Ukraine and therefore the war, Russia had a limited adoption of cryptocurrencies.
How Heavy A Hit Did Russia Take?
Unlike countries such as North Korea. Russia’s economy is deeply ingrained in the global financial system.
In February 2022, the central bank of Russia was banned from accessing more than $400 billion in foreign exchange reserves held abroad. Even with this, a large part of the country’s day-to-day foreign exchange trade is conducted in dollars.
This means that it is very difficult to convert large amounts of crypto into usable currency. It is impossible to offset the large amounts of losses incurred from the billions of dollars that are currently locked away or inaccessible.
What About Mining?
In terms of the energy required to begin mining cryptocurrencies to avoid these sanctions, Russia is covered. The country’s oil and gas sector is one of the areas that have remained unaffected by sanctions.
But as far as using these resources go, Russia is unable to meet up. This is because a large amount of Europe’s oil and gas comes from Russia (about 40%). Russia putting a hold on crude oil exports of about five million barrels a day and focusing on cryptocurrency mining would escalate the energy problem the world currently has. In addition, actions like that would likely be perceived as an act of war, according to Rystad senior oil analyst, Louise Dickson in an interview with Al Jazeera.
Russia’s Cut Off From Swift
In a move to cripple Russia’s economy in response to their invasion of Ukraine, some of the country’s banks have been cut off from using SWIFT, the global messaging system that connects thousands of financial institutions around the world.
This has done a lot to cut off Russia’s participation in the global economy.
Anyone could argue that Russia’s cut-off from SWIFT can be mitigated through the use of cryptocurrency, and they would be right. To an extent.
But the value of cryptocurrencies fluctuates wildly, spelling disaster for an already weakened economy should the worst happen.
