This will lead to “a decline in political support from the U.S. and an increase in regulatory risk.”
If Russia uses crypto to avoid sanctions, Crypto faces regulatory risks
Some analysts warn that Russian President Vladimir Putin may use cryptocurrency to avoid sanctions, as there is increasing talk about banning Russia from SWIFT’s global interbank payment system.
“We believe Washington is concerned that Russia will use crypto as a way to evade sanctions,” Jaret Seiberg Cowen Washington Research Group analyst said Friday. He also said:
We believe that if Russia can use crypto in this manner, political support for crypto in the U.S. will drop and regulatory risk will increase.
Seiberg believes that Russia could find it difficult to use crypto to avoid SWIFT because most of global trade is still in dollars.
He explained that bitcoin payments require a conversion to dollars. This allows for activity to be tracked.
Analysts believe that if Russia cannot use cryptocurrency to bypass sanctions, it could increase the viability and legitimacy of crypto in the eyes regulators.
Seiberg stated that crypto would gain political support if crypto exchanges uphold U.S. Sanctions and if the government could track evasions with blockchains.
Cowen analyst noted that crypto could be facing a crisis in which the government will treat it as a store and value, noting that this could be the case for crypto.
The trading platforms and wallets would come under pressure… Not just in the United States. It would also apply to the U.K., EU, and western allies in Asia.
Two Russian crypto-exchanges were sanctioned by the U.S. Department of the Treasury last year. Chatex and Suex were found to have handled transactions related to ransomware attacks, and other illegal activities.
In a report last year, the Treasury Department identified cryptocurrency in its major threat to sanction programs. The Treasury Department stated that they are aware of the possibility that these digital assets or payment systems could affect the effectiveness of our sanctions if not addressed.
