Russia stands to lose its ability to access dollars as the US and its allies propose to restrict Russian banks from the SWIFT system. The unprecedented step is taken with an aim to cripple Russia’s financing efforts in the war by curtailing access to the dollar-based financial system thus rendering its Central Bank assets less useful.
There has been an outpouring of support for the Ukrainian people hoping for a quick end to the violence. Furthermore, Ukrainian officials have leveraged Twitter to seek assistance via crypto donations. Blockchain entities of all sizes have also begun sprung into action and donate to the Ukrainian cause.
That being said, crypto enthusiasts have wondered if crypto can save Russia amidst calls for strict sanctions. But by gauging from what happened in Canada two weeks back, the decentralization aspect of crypto has failed to put up a strong fight against the centralization powers of government.
Crypto may not be effective owing to Russia’s lukewarm attitude
While cryptocurrency may offer an alternative route for individuals or organizations to transact, the Russian government’s lackadaisical stance on technology and other factors may limit its use for this purpose.
Earlier this month, after the Dzhurinskiy interview, before the launch of missile strikes into Kyiv, the Finance Minister submitted a proposal to allow for Bitcoin to be a legal investment, but not a legal tender.
Andrew Jacobson an associate with law firm Seward & Kissel, told in an interview
“I think Russia probably is thinking about using bitcoin or other cryptocurrencies to evade sanctions, but on the other hand, is probably concerned about those cryptocurrencies getting too much popularity within their own country, because that impacts their own control of their own monetary system, and therefore impacts their power.”
Jacobson went on to state that even if some individuals do choose to turn to crypto, it’s unclear whether they would be able to effectively bypass sanctions using crypto assets.
Caroline Malcolm, Chainalysis’ head of international policy, revealed that the blockchain analytics firm had not yet seen any unusual activity from Russian crypto exchanges over the last few days.
According to a recent report by Wall Street Journal that cited an administration official saying that sanctions on Russia’s crypto activity would need to be crafted in a way that didn’t destroy the broader crypto market which might make the imposing difficult.