FBI director says Russia overestimates cryptocurrencies as a means to circumvent sanctions. What does this mean?
Director of the US Federal Bureau of Investigation (FBI) Christopher Wray has said that conventional money is a more effective tool in circumventing sanctions for Russia, given the ability of the United States to block attempts to use cryptocurrencies on a global scale. It should be recalled that amid the worsening geopolitical situation, Russia has fallen under the largest number of sanctions in history, surpassing even Iran in this regard. At the same time, many experts are still debating whether the Russian government can make full use of crypto to circumvent the restrictions of international financial regulators. Apparently, the answer is no. Here are the details.
The topic of using cryptocurrencies to possibly circumvent sanctions has become very popular this week, given the global pressure on Russia. Because digital assets are decentralised, many saw them as an opportunity to circumvent the new restrictions imposed. However, experts do not see this as possible on a national scale. As Sam Bankman-Fried, head of cryptocurrency exchange FTX, said the day before, even decentralised finance is not capable of doing so. The reason is the existence of entry points that require a demonstration of credentials.
On top of that, cryptocurrency platforms themselves have been quite successful in blocking citizens’ accounts. For example, Coinbase recently froze more than 25,000 accounts of Russian citizens, explaining that they were linked to criminal activity. Read more about this in a separate article.
Will cryptocurrencies help circumvent sanctions?
At a Senate Select Committee on Intelligence hearing, New Mexico Senator Martin Heinrich asked the FBI director whether Russia could respond to the economic impact of the United States’ ban on the country’s oil and gas imports by using gold, yuan or cryptocurrency holdings. Ray noted that the FBI and its partners have “considerable experience” with digital assets, meaning they would be able to limit the Russian Federation in this area as well. Accordingly, government officials are not worried about such a possibility.
Here is a quote with which the expert shares his view of the situation. The quote is quoted by Cointelegraph.
The ability of Russians to circumvent sanctions with cryptocurrencies is probably highly overestimated, both by themselves and other countries. We as an organisation and our partners abroad are far more effective at curbing the crypto-sphere. Ultimately, what the Russian government really needs to do is gain access to some form of national currency, which makes it much more difficult to crack down on attempts to circumvent sanctions.
FBI Director Christopher Wray
Director of National Intelligence Avril Haynes also added that Russian President Vladimir Putin probably foresaw the sanctions and created a reserve fund to reduce the negative impact on the economy. However, she said the US Treasury Department and other governments adopting sanctions against Russia have made it difficult to access these funds.
Read also: Hillary Clinton criticised cryptocurrency exchanges for their reluctance to impose sanctions on Russian residents
Meanwhile, the very popularity of cryptocurrencies around the world will only increase. According to the contents of eBay’s recent investor pitch, cryptopayments could soon be a new hit. During the presentation, company officials showed a slide with a screenshot of their own digital wallet, which is supposedly scheduled for release in the second quarter of this year. eBay CEO Jamie Iannone has actively hinted at increased adoption of crypto projects within the company before, and now those claims are slowly starting to materialise in the form of products.
eBay CEO Jamie Iannone
As a reminder, digital wallets are platforms that store payment information. Apple Pay and Google Pay, for example, are designed primarily for credit and debit cards. Instead of pulling out a physical wallet, the user of such a wallet can pay by touching the merchant terminal with their phone. Digital wallets can also store private keys that allow users to pay with bitcoins or other cryptocurrencies. In addition, such a digital wallet could contain information about a particular user’s NFT, which could also, in theory, make exchanging unique tokens much more convenient.
We believe that cryptocurrencies are really unsuitable for circumventing sanctions at the scale of entire states. The coin industry today is very closely tied to banks, which provide niche deposits and withdrawals. Therefore, expecting easy transactions of millions of dollars for the sake of further transfers of digital assets is not an option. Especially since US authorities have been really successful in blocking users and restricting the coin industry when necessary.
More information about eBay’s digital wallet should be expected in the next couple of months. Subscribe to our millionaire cryptochat so you don’t miss updates on the situation.
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