According to recent reports, the possibility of banning Russia from the SWIFT global interbank payment system after its invasion of Ukraine has skyrocketed. However, there has been broad speculation that the Russian government might be considering the use of Bitcoin to bypass international sanctions.
This is because digital currencies like Bitcoin, Ethereum, and Litecoin are decentralized (they’re not controlled by the governments or central banks).
But, there are a number of challenges:
BLOCKCHAIN: (the technology that underpins Bitcoin and other digital currencies) is a public ledger of activity. Therefore, it’s possible to track transactions.
The biggest misconception about crypto remains that it is untraceable and is primarily used for nefarious purposes, which could be further from the truth.Vijay Ayyrar, Vice President of Corporate Development & Global Expansion, Luno.
LIQUIDITY IN CRYPTO: which refers to the ease with which tokens can be swapped to other tokens or government-issued fiat currencies like USD, is not enough for Russian Oligarchs and companies to move money around easily.
CRYPTOCURRENCY EXCHANGES: The CEO of data firm Cryptocompare, Charles Hayter, said, “Exchanges that operate with strong processes and codes of conduct will be watchful at this moment for funds that have nefarious origins”.
Every U.S. business has to follow the law. It doesn’t matter if your company handles gold, real estate, crypto, dollars or non-financial assets. Sanction laws apply to all U.S. people and businesses. It would be a mistake to think crypto businesses like Coinbase would not follow the law. Of course, we will. This is why we screen people who sign up for our servicesBrian Armstrong, CEO, Coinbase Wallet
Binance, the world’s largest Cryptocurrency Exchange, slightly disagreed, saying, “blocking all Russian users would fly in the face of the reason crypto exists. But, it’s unlikely that this can be any use for Moscow, because there aren’t enough dollars in the crypto-trading system to meet Russia’s needs”.
Does It Mean Bitcoin Is Finally Becoming a Widely Accepted Digital Currency?
The answer to this question is yet to be confirmed, as most countries don’t accept Bitcoin. However, analysts believe that Russia’s usage of bitcoin could boost the viability of Crypto in the eyes of regulators.
If Russia is able to use crypto this way, then we believe political support in the U.S. for crypto will fall and regulatory risk will riseJaret Seiberg, Cowen analyst
The Cowen analyst said, “for crypto, this could be the crisis that determines how the government treats its use for payment and as a store of value”.