- The crypto community has mostly supported Ukraine in its conflict with Russia, but could Bitcoin be the way out of the crippling sanctions imposed on Russia.
- Experts believe that turning to Bitcoin could backfire on President Vladimir Putin, but identified one sleek way in which he could still use crypto.
Vitalik Buterin, a Russian citizen by birth is one of several crypto leaders who have called out President Vladimir Putin for his ‘senseless’ invasion of Ukraine. Digital Currency Group’s Barry Silbert, FTX billionaire founder Sam Bankman-Fried, NFT rockstar Beeple and many more have all had their say on the conflict, with all of them calling for a ceasefire. But even as he gets criticized, could Putin’s Russia turn to Bitcoin as a way out?
As Putin invaded his neighboring country, global powers including the U.S, Germany, the U.K, and France all united in a rallying call to impose harsh sanctions on Russia. These sanctions, which include a call against buying Russia’s oil, could have a severe impact on the Russian economy.
So, could Russia turn to crypto to evade these sanctions? Well, there is a case for it. Unlike the U.S dollar, which is the world’s reserve currency, Bitcoin isn’t centralized and can be accessed even by those who have been sanctioned.
But according to a number of experts, even Bitcoin won’t save Putin.
Ari Redbord, the head of legal affairs at crypto compliance firm TRM Labs told NBC News:
The fact is, these sanctions are going to be potentially crippling and could become more crippling, and there’s nothing crypto can do about that. Oftentimes you hear that the crypto industry is this unregulated Wild West, and that’s just not true…
Salman Banaei from Chainalysis concurs. He says that the same qualities that attract some to crypto such as its transparency are the same qualities that make them hostile to criminals.
“When you look at crypto, it’s a market that at first glance looks like a great way to hide sources of funds and transfer funds across the globe,” Salman, who is the head of public policy for North America at Chainalysis said.
The issue, however, is that transfers of cryptocurrency can be followed in real time. In the last few years there’s been a number of technological breakthroughs in terms of tracing crypto activity, both simple activity and through mechanisms that are intended to obscure the source of funds.
Zachary Goldman, a partner at WilmerHale, a law firm, added:
If you steal a diamond watch, there’s only one diamond watch. But if you steal $200,000 in crypto, that can potentially be accessed through a wide range of mechanisms.
But while he may not transact using cryptos with global trading partners, Putin could use the oil that other countries are staying away from to trade crypto, just like Iran did.
Tom Robinson, the co-founder of London-based crypto analytics firm Elliptic noted:
Cryptocurrency mining provides a way for Russia to monetize its oil and gas reserves on the global market even if it isn’t able to physically export them.
Related: Ukraine-Russia tensions: What effect have they had on BTC miners?