Sanctions seek to limit Russia’s crypto industry

While most of the fears associated with cryptocurrencies and sanctions in recent weeks has been Russia’s ability to dodge financial penalties through blockchain, the opposite narrative is emerging.

Financial restrictions against the country and limited import may have a far more damaging impact on the country’s crypto mining.

Lack of equipment, with Taiwan vowing to block any deliveries of superconductors and the world’s biggest hardware manufacturers opting out of doing business with Russia, the country’s crypto elite faces serious challenges.

Lat week’s Office of Foreign Assets Control (OFAC) action against BitRiver, a Russian crypto mining company, is indicative of the growing awareness of the role that crypto may have in generating wealth unrelated to the mainstream financial system.

Even though numerous executives from the crypto industry have dismissed fears that Russia may use crypto to dodge sanctions, akin to what Iran and North Korea do with limited success, US officials remain concerned about the possibility.

This is why the financial sanctions also come with a ream of other limitations, including trade embargoes, and this is where the Russian crypto industry will hurt the most. The International Monetary Fund has echoed the concerns of OFAC and other officials in suggesting that more needs to be done to ensure that sanctions are not avoided.

Even Binance has changed its tune over the past week and said that while it still maintained that innocent civilians should not be targeted by sanctions, businesses and individuals who are based in Russia will now have their transactions limited to the equivalent of 10,000 euros in digital currency.

 

However, data by CryptoCompare indicated that crypto trading between the ruble and digital currencies hit an all-time record of 111.4 billion rubles in March, roughly $1.4bn. However, much of this activity slumped in April.

But Russia is a much more significant powerhouse when it comes to cryptocurrencies than it’s given a credit for. According to Cambridge University, Russia is the world’s third-biggest bitcoin (BTC) mining hub, which means that piling on restrictions could force more people to move out of the country if they want to maintain their businesses.

In the growing hostility between Russian on one side and NATO and the European Union on the other, there may be few alternatives left for Russian BTC miners.

If you want to stay away from the world of politics, you may instead choose to spend your crypto at recreational venues such as Bitcasino, 1xBit or FortuneJack.

 

Source

Updated: 04/27/2022 — 09:00