The main reason for the possible use of cryptocurrencies by the Russian government is the blocking of the country’s assets worth hundreds of billions of dollars by US and European representatives due to Russian activities in Ukraine. Accordingly, the authorities may be interested in having a decentralised asset that cannot be influenced. Moreover, such a proposal was voiced back in mid-April.

It should be noted that the Russian government is indeed looking for options for international payments. In particular, today it became known about comments of the Chairman of the Bank of Russia Elvira Nabiullina. She said that if necessary, the country can use part of the available gold and currency reserves to pay for imports. This means that the crypto version no longer seems so improbable.

What’s going on with cryptocurrencies in the Russian Federation

According to IMF experts, decentralised platforms and exchanges, as well as anonymous cryptocurrencies like Monero (XMR), could become Russia’s main instruments in its new economic policy. In addition, the Russian government may devote considerable attention to mining to “monetise energy exports to circumvent sanctions.

Leaders in the number of sanctions against Russia

Russia has "collected" the most sanctions so far - and even more than North Korea. The EU is now actively discussing the possibility of imposing further restrictions on Russian oil and gas exports. In theory, crypto settlements with foreign countries could offset the effect of the sanctions, but their volume is likely to be trivial.

North Korea and Venezuela already have experience in evading US sanctions. According to CryptoPotato sources, these countries are also actively developing cryptomining. Here’s a rejoinder from the experts.

Over time, countries hit by sanctions may devote more resources to circumventing sanctions through mining. Mining cryptocurrencies like Bitcoin could allow countries to monetise energy resources, some of which cannot be exported due to sanctions.

This is interesting: RF bankers propose to penalise users of non-custodial cryptocurrencies. Why.

For now, the IMF notes that this type of activity is “relatively limited” in sanctioned countries. However, the possibility of its exponential growth will always exist, and it is something truly uncontrollable. Experts continue.

At the moment, the proportion of cryptocurrency mining in sanctioned countries and the overall amount of revenue generated from this activity suggest that the scale of such financial inflows is low, but risks to financial integrity remain.

US officials have previously hinted at the possibility of imposing additional sanctions against Russia

What does this mean? First, the capitalisation of the crypto market is still too small for it to provide such a large country with enough liquidity to fully conduct energy transactions. Second, even if Russia plans to engage in mining at the state level, the deployment of their own mining centres will definitely not happen in the near future. Plus, reforms in the regulation of digital assets need to be approved at the legislative level for this to happen.

Will there be pressure directly on the cryptosphere? It looks like they will. In particular, this morning it became known that the Binance exchange restricted the accounts of users from the Russian Federation with the equivalent of more than 10 thousand euros. At this point, they can only withdraw funds, not trade them. If a citizen of the country has a smaller amount of coins or lives outside the Russian Federation, the restrictions will not affect him.

Changpen Zhao, founder and CEO of Binance

That said, the US has a strong track record of seizing digital assets: the US Secret Service has seized more than $100 million worth of crypto from various kinds of criminals over the past seven years. The day before, the federal agency said that it has handled around 254 cases related to crypto fraud since 2015, CryptoSlate reported. That said, the US Secret Service’s activities are yielding positive results – the agency does not intend to retreat from its tactics anytime soon.

According to the agency’s Assistant Director of Investigations David Smith, the agency’s success is due to multiple agents and analysts actively tracking the movement of Bitcoin and other cryptocurrencies on blockchains. Smith noted that tracking a cryptocurrency wallet is very similar to tracking an email address with some correlating identifiers.

Once a person and another person make a transaction and it hits the blockchain, we have the ability to trace that email address, or wallet address if you like, and track it through the blockchain.

Hacker

Still, one of the benefits of cryptocurrencies has made them a powerful tool in the hands of criminals, experts say.

One of the features of cryptocurrencies is that they move money faster than traditional financial instruments.

True, the openness and decentralisation of coins like Bitcoin is a major disadvantage for criminals – digital footprints make it very easy to uncover criminal financial schemes. So it is hoped that in the future the industry will be even safer for ordinary users.


We believe that the prospects of developing mining in Russia to circumvent sanctions on a large scale are unlikely. Still, this sphere requires serious investments and does not bring an instant result: as we found out the day before, return on investment in case of ETH mining at the moment is about 1.5 years. Therefore, we can hardly expect to see tens and hundreds of millions of dollars in crypto for international settlements. Be that as it may, this position may well be suitable for further sanctions against users of cryptocurrency exchanges and services from the Russian Federation.

Look for even more useful and interesting news in our Millionaire Crypto Chat. There we will talk about other topics related to blockchain and decentralisation.