The sanctions could harm the Russian multi-billion dollar crypto industry

Illuminated mining facilities operate inside racks at the CryptoUniverse cryptocurrency mining farm in Nadvoitsy, Russia.

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According to experts, sanctions imposed on Russia for the country’s unprovoked invasion of Ukraine could hamper the growth of its multi-billion dollar crypto sector.

This week, US officials targeted the Russian bitcoin BitRiver mining company in its last round of sanctions aimed at damaging the Russian economy. Office for the Control of Foreign Assets of the Department of the Treasury He says fears that Russia could monetize its vast reserves of oil and other natural resources for energy-intensive cryptocurrency mining as a way to raise funds and circumvent Western sanctions.

“This is a powerful signal of OFAC that it will use all the tools in its arsenal to prevent Russia from evading sanctions through cryptocurrencies,” David Carlisle, vice president of political and regulatory affairs at the company, said in an email note. compliance with Elliptic cryptocurrencies.

The sanctions will cripple BitRiver and its various subsidiaries, preventing them from accessing U.S. crypto exchanges or mining equipment. Cryptocurrency mining, the process of validating new digital currency transactions, requires specialized computers that consume a lot of energy.

The move shows that US officials are “deeply concerned that Russia may use its natural resources to conduct cryptocurrency mining to evade sanctions,” something. Iran Other North Korea they have been known to engage in the past, Carlisle said.

The potential exploitation of bitcoin production for evasion of Russian sanctions remains a key concern for global regulators, including the International Monetary Fund.

“Cryptocurrency mining, while in no way a substitute for assets frozen by Russian sanctions, avoids fiat-to-crypto ‘on-ramps’ and crypto-to-fiat ‘off-ramps’ in centralized virtual currency exchanges. thus bypassing sanctions screening, ”said Anand Sithian, a Crowell & Moring attorney and former trial attorney in the Criminal Division of the Asset Confiscation and Money Laundering Section of the Justice Department.

The Russian cryptocurrency market

Separately, Binance, the world’s largest cryptocurrency exchange, said it is limiting its service for Russian users in response to the fifth wave of EU sanctions about Moscow.

Russian Binance accounts with more than € 10,000 in digital currency will be barred from making deposits or exchanges and will only be able to withdraw funds, the company said.

“While these measures are potentially restrictive for ordinary Russian citizens, Binance must continue to lead the industry in implementing these sanctions,” Binance said in a statement. updated on its website. “We believe all other major exchanges should soon follow the same rules.”

Russia is home to a huge cryptocurrency market. The Kremlin estimates that Russians own around 10 trillion rubles ($ 124 billion) value of digital assets.

It’s unclear where this data came from, but there is mounting evidence that Russians are turning to cryptocurrencies as an alternative. the ruble as the currency collapses in response to the country’s economic isolation.

According to data from CryptoCompare, ruble-denominated cryptocurrency trading volumes reached 111.4 billion rubles ($ 1.4 billion) in March, much higher than in previous months. The activity declined in April, with a total volume from the beginning of the month reaching just 19.2 billion rubles. Binance was the most popular exchange for rubles and cryptocurrency volume in March, accounting for 77% of exchanges.

In the six months ending March 2022, the trading volume of rubles and cryptocurrencies exceeded 420 billion rubles, or more than $ 5 billion, according to CryptoCompare.

Third largest bitcoin mining hub

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