Russia and Ukraine: How the West wants to prevent Russian oligarchs and other citizens from using cryptocurrencies to evade sanctions - Start Up Gazzete
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Russia and Ukraine: How the West wants to prevent Russian oligarchs and other citizens from using cryptocurrencies to evade sanctions


As the West has imposed a battery of financial sanctions on Russia following the Ukraine invasion, fears are growing among governments that oligarchs and other Russian citizens could evade the restrictions through the cryptocurrency market.

That is why the Ukrainian government, together with its allies in Europe and the United States, has asked the largest virtual currency transaction platforms to abide by a financial blockade.

In a tweet published this week, Ukraine’s Deputy Prime Minister Mykhailo Fedorov called on cryptocurrency platforms to not only block politicians and oligarchs, but also Russian citizens.

And French Finance Minister Bruno le Maire said the European Union will include cryptocurrencies in its sanctions against Russia, with the aim of making Moscow’s aggression against Ukraine as costly as possible.

For its part, the British government also announced measures to crack down on money laundering by Russian “oligarchs and kleptocrats ,” including new powers to seize crypto assets.

Despite the calls, the large firms that operate with cryptocurrencies such as Binance, Coinbase or Kraken, refused to impose a general restriction against Russian citizens, although they were willing to examine the operations of specific people who have been subject to sanctions.

In an interview with the BBC, Binance founder and CEO Changpeng Zhao said that “many ordinary Russians don’t agree with the war” and ruled out restricting them from using the service.

Cryptocurrency miner in Russia.

“We are not against any people ,” Zhao said. “We differentiate between Russian politicians who start wars and normal people.”

The businessman explained that his company does not control the industry and that if they applied a general restriction to the Russians, they would move to other smaller platforms.

“An Attractive Haven for Oligarchs’ Wealth”

Caroline Malcolm of consultancy Chainalysis argued that “as with the traditional financial system, cryptocurrencies could be leveraged by Russian oligarchs to evade sanctions.”

However, he said it was unlikely that sanctioned individuals would now move large amounts of cryptocurrency.


“Russia’s financial elite and authorities have been preparing for sanctions for some time,” he said. That “could have slowly passed in recent months.”

Tom Robinson of blockchain analytics firm Elliptic claimed that cryptocurrencies could be an attractive haven for oligarchs’ wealth as they cannot be seized and no one can prevent them from moving.

But it’s also not that easy, he explained, because the movements are “highly traceable, which means they would have a hard time spending anywhere sanctions apply.”

The first “crypto conflict”

Tom Keatinge, director of the Center for Financial Crime and Security Studies (CFCS), part of the Royal United Services Institute (RUSI) think tank, agrees on that.

Keatinge warned that cryptocurrency platforms that do not follow the rules could be deprived of financial services.

bitcoin symbol

“Banks that provide services to cryptocurrency firms will closely monitor the activities of their clients to ensure that they diligently apply the controls required by the sanctions against Russia.”

The war in Ukraine could become the first significant ” crypto war ,” Keatinge added, as those looking to “evade sanctions, protect their savings, or prevent the collapse of the banking system, turn to cryptocurrencies for solutions.”

“Trade between the Russian ruble and crypto assets such as Bitcoin and Tether has doubled since the assault on Ukraine began, reaching $60 million a day,” British newspaper Financial Times reported.

“Greater financial freedom”

One of the arguments of the cryptocurrency platforms is that the virtual currency market aims to give “greater financial freedom” to people around the world.

Therefore, any unilateral ban would “oppose” the very reason cryptocurrencies exist.

Cryptocurrency miner in Russia.

“I think there are a few hundred people who are on Russia’s international sanctions list and they are mostly politicians,” Zhao told the BBC. “We follow that very, very strictly.”

” We are not politicians , we are against the war, but we are here to help people,” he said.

financial penalties

Some of the financial sanctions that the West has imposed on Moscow include the exclusion of the international banking payments platform SWIFT , a veto on the operations of its central bank and an embargo on the supply of semiconductors and technology for key sectors.

Until now, the sanctions of the Western powers have also focused on financially punishing individuals linked to the government of Valdimir Putin.

The measures against the Central Bank of the Russian Federation, which have been considered by experts as some of the toughest restrictions, include the freezing of reserves that it has deposited in other countries, for a total value of close to US$630,000 million.

Some commercial banks have also seen their assets frozen abroad.

In parallel, some companies, including Apple, Jaguar Land Rover, H&M and Burberry, announced that they will suspend their activities in Russia.

A few days after the start of the conflict in Ukraine, the energy company BP announced that it would end its operations in Russia.

This was followed by promises by Shell, ExxonMobil and Equinor to cut their Russian investments following pressure from shareholders as well as governments and the public.



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  • BBC News World
Author avatar
Joshua Smith

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