During the current war in Ukraine, cryptocurrencies are becoming more and more interesting for people. Bitcoin, Rublix and Co. have no connection with banks or other monitored payment systems and cannot be traced.
Western politicians have recently expressed fears that the Russians are using e-money to circumvent sanctions. More and more emerging evidence confirms that fear is not in vain.
Fedorov demands: Block Russian users!
According to the Reuters news agency, the United Arab Emirates should be a safe haven for Russians who wish to keep their assets in another country. In the form of cryptocurrencies, they want to invest their money in real estate there. Ukrainian Deputy Prime Minister Mykhailo Fedorov calls for Russian users to be blocked from crypto websites. So far to no avail, but some owners have cooperated by blocking the Russians who are already on the sanctions lists. A glimmer of hope: the American trading platform Coinbase assured that around 25,000 Russian accounts would be blocked.
These facts confirm that cryptocurrencies are gaining prominence in times of war. But can they also lead the war? Philipp Sandner, a government adviser and cryptocurrency expert, thinks that is unlikely. Switching to computerized money is still only a theory. But that could change in the future. The Russian capital would have the possibility of switching to the new Chinese cryptocurrency e-Yuan. In this case, Russia has a chance to bypass the Swift international payment system.
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stablecoins instead of bitcoins
Other crypto connoisseurs also have the opinion. Blockchain expert and entrepreneur Maximilian Schmidt says most crypto exchanges will hardly have creditworthiness with such a size of state. As soon as Russians started exchanging their money for cryptocurrencies on a large scale, prices fluctuated a lot. This is already demonstrated by the Bitcoin price increase that occurred after Swift’s announcement. “The price probably went up because a lot of wealthy Russians invested in Bitcoin,” says Maximilian Schmidt. Stablecoins would be more interesting as an investment. Their price has also increased. However, the fluctuations are not so easy to see. Because stablecoins are more dependent on the value of individual currencies, like the dollar.
Stablecoins are traded by the American platform Circle. Circle has already excluded the Russian company because it wants to comply with new sanctions orders. Maximilian Schmidt says no one managing large sums on the platform is likely to be affected. “People who know cryptocurrencies would never have such a large amount of money managed by a platform, but store it independently,” says the blockchain expert.
Conclusion
“It is not a solution to ban crypto-currencies because we could circumvent the sanctions with it”, explains Maximilian Schmidt. It would be like banning cash. A state-supervised financial system would be too great a threat to politics and democracy.
Not only Russia, but also Ukraine currently use cryptocurrencies. About $50 million in crypto was reportedly donated to Ukraine after Fedorov tweeted for help. “The first large-scale crypto fundraiser to fund a military campaign,” crypto-analytics firm Elliptic calls it.