Russia is Using Crypto to Evade Sanctions

Russia is Using Crypto to Evade Sanctions

• The head of the ECB, Christine Lagarde, said that she was very concerned about this and considered that cryptocurrencies pose a threat to the success of the sanctions imposed by the West on the Russian government for the invasion of Ukraine.
• US President Joe Biden and his European allies will announce a new sanctions package against Russia on Thursday, the White House said.

The president of the European Central Bank, Christine Lagarde said that in Russia cryptocurrencies are being used to bypass the sanctions imposed by the West. The statements came on Tuesday, hours before the White House announced new sanctions against the invading country by the US and the European Union.

Lagarde pointed out that there are indications that some Russians may be using digital assets to circumvent sanctions for the invasion of Ukraine, by converting rubles into cryptocurrencies and stablecoins, as well as stablecoins into other digital assets.

In her dissertation at the Bank for International Settlements Innovation Summit, she indicated that the monetary authorities are observing an unusual increase in the volume of transactions with cryptocurrencies involving the ruble, as reported by Bloomberg.

"When you see the volumes of rubles into stable, into cryptos, at the moment it is the highest level that we have seen since maybe 2021," the European official said during the virtual conference. Likewise, she highlighted that cryptos “are certainly being used as a way to try to circumvent the sanctions that have been decided by many countries around the world against Russia and a particular and specific number of players."

Crypto is “a threat”

However, in her speech Lagarde did not directly single out the Russian government as evading sanctions through the use of cryptocurrencies. She said that it is Russian companies and individuals who are using digital money for this purpose.

Lagarde considers that cryptocurrencies represent a threat for the sanctions to achieve their objective, while taking the opportunity to promote the benefits of the digital euro, the central bank digital currency (CBDC) that the ECB plans to launch soon.

The head of the ECB said that CBDCs "are associated with safety, soundness, security, and benefit (from) the trust that is often associated with the national financial institution, such as a central bank." She also warned that cryptocurrencies cannot be left to be a loophole when it comes to sanctions.

European governments have “taken steps to clearly signal to all those who are exchanging, transacting, offering services in relation to crypto assets that they are being accomplices in trying to circumvent sanctions that would otherwise be applicable,” she emphasized.

On the Flipside

• From the very beginning of the war, it was said that Russia would try to use cryptocurrencies to trade its exports and evade harsh sanctions from the West.
• Crypto Exchanges such as Binance and Coinbase (NASDAQ:COIN) said they did not intend to block their Russian clients, unless ordered to do so by the US and European governments.

New sanctions against Russia during NATO summit

Also Tuesday, the White House said that President Joe Biden and his European allies will hold an emergency NATO summit in Brussels on Thursday. There, too, Biden will meet with the Group of 7 and attend a session of the European Council.

During the meeting with European heads of government, a new package of sanctions against Russia will be announced. According to White House national security adviser Jake Sullivan, the new measures seek to prevent the Kremlin from circumventing current economic sanctions.

This involves "not only adding new sanctions, but also ensuring that there is a concerted effort to crack down on evasion," the official was quoted as saying by Bloomberg.

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