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Crypto Sanctions: Is it Possible to Stop Crypto?

The announcement of Russia to invade Ukraine brought numerous consequences to the global economy. Multiple European nations struggled with managing resources after the US announced sanctions on Russia, leading the latter to ban exports and rely on crypto services. Crypto sanctions were also announced against Russia in such circumstances, but are they enough to stop crypto?

Russia: A Crypto Nation Despite Crypto Sanctions?

Russia’s invasion of Ukraine saw the global superpower and one of the largest producers of Oil receiving numerous bans. From luxury goods brands to finance and banking services, every industry received sanctions to cease business in Russia.

crypto sanctions

Not only did it cripple Russia’s economy, but it also made them reliant on using crypto payments. Several crypto exchanges also banned their services in Russia via a crypto ban to add insult to injury. But, Russia still has plenty of crypto reserves, and it continues to make crypto payments. So how are they doing it?

Russian Crypto Mining Operations

The Russian government receiving numerous crypto sanctions has not impacted crypto mining operations negatively. On the contrary, such operations have only grown over time in the duration of the recent events. Currently, Russian nations have more active crypto mining farms than most nations, including some tax-safe crypto havens.

Why do Russian Crypto Sanctions Mean Nothing?

The imposed crypto ban on Russia does affect its crypto economy but not to the extent that the superpower is facing an imminent downfall. Several factors continue supporting Russian Crypto activities, which are listed below.

crypto sanctions

One of the Largest Crypto Miners

Naturally, after the crypto sanctions led to the freeze of Russian assets, the mining operations still hit an all-time high. In March 2022, the weekly crypto mining activities amounted to $1.4 billion per week, which was only a sixth of it a month before.

Furthermore, the discovery of the largest crypto mining operations in the world at an old Russian Jail called Butyrskaya prison in central Moscow is proof that Russian crypto mining operations are anything but far from ceasing.

Non Taxable Crypto Regulations

The lower chamber of the Russian Parliament was quick to add several significant changes to its crypto mining bill policies. After receiving a crypto ban from several crypto exchanges, the bill swept away the tax amnesty from miners during the first year of their operations. However, Russia is the world’s third-largest bitcoin mining hub, favoring its crypto activities.

Additionally, a Kremlin report states Russians own approximately 10 trillion rubles ($124 billion) worth of digital assets. Therefore, it’s unlikely that the Russian government will impose severe bans on crypto activities within its borders.

crypto sanctions

Crypto Support From Chinese Institutions

After Binance, the biggest global crypto exchange, imposed crypto sanctions on Russia, the country needed a medium to convert crypto. Herein to Russia’s rescue came crypto exchanges and banks operating in China. Besides it, both nations have also signed a 30-year deal, which will let Russia supply gas to China and allow Russian wheat imports to China.

Russia’s Crypto Ban Effects On the Global Crypto Market?

The existing crypto sanctions on Russia did reflect its effect on global crypto trading, wherein several top cryptos went down up to or over 10%. The dip continued its downward trend until the end of the week, after which the cryptos were quick to recover.

Although the cryptos fell again, credit to the LUNA incident, the role of Russia in keeping crypto alive is undeniable. It was also reported that a few nations, like Thailand and China, allowed Russian tourists to pay with crypto since sanctions also banned the SWIFT global wire payments system for all Russian natives and institutions.

Increase in Gas Fee for Crypto Transactions?

While the Russian government continues to ban unregistered crypto mining activities in the nation, the crypto ban did affect gas prices. On Ethereum, the gas fee went as high as ~400 ETH, which hovered around the mark for several hours but dipped to ~80 ETH and further in subsequent days.

Simultaneously, the number of reachable Bitcoin nodes continues to grow, exceeding the count of over 15,000. Such figures suggest that the impact of any crypto bills or bans on the Russian economy will directly affect global crypto validation operations.

crypto sanctions

Dethroning the US Dollar as the Financial Haven?

It is widely known that the USD has been the Financial reserve Currency standard in the world for several decades. However, the long-term effects of the US Federal Reserve led Office of Foreign Assets Control (OFAC) imposing crypto ban sanctions could make European nations consider adopting cryptos.

By freezing Russia’s foreign currency reserves and halting international payments from Russian banks, EU nations question their reliance on SWIFT, whose over 40% of deals are dollar-based. SWIFT is the Belgium-based Society for Worldwide Interbank Financial Telecommunication, a primary global messaging network for executing transactions between the world’s banks.

Will Global Economies adopt Crypto?

Based on the global financial climate, deploying any strict law or another bill concerning cryptos or fiat currencies can be detrimental for every country. In contrast, several countries or governments continue to recognize cryptos or Virtual Assets as highly volatile or non-ideal for replacing existing financial instruments and systems.

Parallelly, nations like the US and India are already developing a centralized digital financial system based on crypto blockchain technology like the ECash, CDBC, etc. Therefore, it is less probable for developed nations to adapt to the existing global virtual asset market. Contrarily, developing countries like Bangladesh, Sri Lanka, etc., may begin accepting crypto virtual assets.

Final Words

As per the numerous financial and crypto sanctions levied by multiple nations on Russia, it is unlikely that the superpower will ever pass a bill for a complete crypto ban. Aided by the US Courts chasing crypto exchanges that attempt to skirt Russian institutions’ financial sanctions, Russia may become the world’s crypto capital within the decade.

Ultimately, stopping crypto is nigh possible unless another incident like the LUNA crash occurs with Bitcoin or Ethereum in the upcoming years.

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