The war in Ukraine will be the first major conflict to test whether bitcoin (BTC) and other cryptocurrencies can skirt international sanctions.
According to analysts, this is highly unlikely as crypto is borderless and it requires no central authority to approve a transaction.
Calls for crypto exchanges to suspend payments to Russian accounts have been turned down by operators, arguing that economic freedom should not suffer.
The main reason this may be difficult for most people is the fact that there simply isn’t enough liquidity to go around.
Russia may try to do what Iran has done in the past – if the conflict draws on – and turn its fossil fuels into BTC, which it can then sell.
However, the US is ramping up its regulatory scrutiny of the space and it’s not alone. Europe, which has condemned the war in Ukraine, said that it would try to ensure that Russia cannot use crypto to dodge sanctions.
The French minister of finance Bruno le Maire said on Wednesday that the European Union is forming a new task force, similar to the one in the US to ensure crypto will not be used as an escape route for economic sanctions, even if crypto exchanges continue to allow payments from Russian accounts.
Russia has been preparing for events such as these and its assets in the People’s Bank of China have helped it stay afloat.
However, the ruble has lost much of its value (a more than 30% devaluation since the war began) and is unlikely to recover soon.