Ukraine Conflict: The Unexpected Turning Point for Cryptocurrencies
The Russia-Ukraine conflict has caused global anger, but the collision between sanctions initiated by the west and borderless money is taking center stage.
When Ukraine requested crypto exchanges to stop Russian-related transactions, they put forth defiant responses attached to libertarian principles. However, a significant number of them implemented the sanctions to further choke the Russian economy.
Crypto Exchanges at the Heart of Crypto Response to Geopolitical Conflicts
Crypto exchanges are major players in the crypto niche, and their actions reflect the challenges, call it a dilemma, of the community in the unfolding Russia-Ukraine crisis. It is emerging into a defining moment for cryptos, such as Cardano (ADA), Bitcoin (BTC), and Ethereum (ETH).
Checking the Ukrainian side, cryptos are operating as expected, helping aid borderless funds transfer. Already, more than USD54 million have been raised as donations in cryptos. However, it is the opposite when it comes to the Russian side. Any effort to transfer cryptos both to and from Russia has met severe sanctions. The big question is, “can the crypto market help fuel war and make it possible for Russian billionaires and oligarchs to preserve their wealth?”
Between crypto, especially Bitcoin hardliners, and crypto exchanges, there appears to be agreement about the libertarian ethos used in the industry. This is coming in the backdrop of other key issues related to cryptos, such as the embracing tech that is now the preference for money laundering and investment hedging. Cryptos have also been at the center stage for requiring huge amounts of electricity.
Now, crypto enthusiasts are faced with yet another reality: to transform them into big business, they must be ready to take international sanctions. According to Ryan Selkis, CEO of Messari, a respected crypto research and data firm, the libertarian stand is pegged on the need to avoid direct surveillance and extrajudicial seizures. However, he maintains that the crypto community respects the law and existing systems.
Cryptos: Are They Out of Reach by the Rule of Law said Romain Chiaramonte
Cryptos have transformed from nascent technology to a mainstream discipline that attracts ads from million-dollar brands in recent years. So, how exactly do cryptos work?
Romain Chiaramonte explains that cryptos rely on blockchain technology, a sort of immutable public ledger that allows transactions without a central authority. But this model is becoming under sharp focus in the light of the Russian-Ukraine conflict.
When the first sanctions against Russia were issued, Binance, the biggest crypto exchange, responded by indicating such a move would negate the very purpose for crypto creation. However, Changpeng Zhao, CEO of Binance, gave a different viewpoint. He indicated that Binance applies the same sanctions rules as banks. Even with this, he indicated that they would not freeze Russian crypto assets because they lacked the authority to do so.
It is not just binance. Other exchanges have indicated they are ready to comply with E.U. and U.S. sanctions. This might explain why the U.S. Department of Treasury has not raised concerns for non-compliance.
Experts indicate that President Vladimir Putin will not be able to use cryptos to circumvent sanctions. This is because the crypto market is only worth USD2 trillion, which is not big enough, and works with departments dedicated to countering money laundering. Brett Harrison, the president of exchange FTX.US, indicated that they have advanced tools to identify sanctioned persons and nations, track withdrawals and deposits, and halt them.
It is emerging that the reality of cryptos is different from what was espoused by the pioneers. Timothy May, the physicist who wrote “The Crypto Manifesto” back in 1988, indicated that cryptos would be a haven for criminal and foreign elements. And true to this argument, crypto-linked crime hit a record high of USD14 billion in digital currencies, but this is only about 0.15% of the total crypto volume.
The whole scenario of sanctions has indicated that cryptos are not entirely out of reach of the government systems. So, if you are a Russian with some savings in cryptos, it might be an awesome idea to back them up in a hard wallet, such as Trezor.
In his view, which is supported by many analysts in the crypto niche, Romain Chiaramonte posits that the current Russia-Ukraine conflict might be here to separate the myths from reality. Cryptos are not 100% out of reach. Recently, the U.S. authorities seized Bitcoins worth USD3.6 billion. So, people with cryptos had better put additional layers of security, such as the use of cold stores/ wallets to make seizures harder.