Blockchain-analysis firms have revealed that Russian denominated crypto purchasing and trading on major exchanges have declined, putting an end to theories that the country will pivot to digital assets to by base economic sanctions imposed by Western nations.
As Bitcoin did a near $10,000 rally, from trading below $35,000 to hitting almost $45,000 since the war between Russia and Ukraine began, some industry experts attributed the surge to Russians buying cryptocurrency in a bid to circumvent economic sanctions.
This theory seems to be proved false, however, as data from Chainalysis showed that ruble-denominated crypto trading volume was just $34.1 million on March 3, around half of a recent peak of $70.7 million a week ago representing a 51.77% decline, on the day the war stated.
What they are saying
- Speaking on the matter of sanctions-fueled crypto purchasing to Bloomberg, Citigroup analyst Alexander Saunders explained, “Russian volumes have been relatively small so far, suggesting that the price action is more due to investors positioning for an expected uptick in demand from Russia, rather than Russian demand itself.”
- Recently, New York state increased its blockchain surveillance capacities to further prevent cryptocurrencies or digital assets from being used to support Russian interests. New York Governor, Kathy Hochul, issued an executive order on February 27 directing state agencies to divest from Russian institutions and companies, as well as entities that provide them with support.
- She stated, “New York is proudly home to the nation‘s largest Ukrainian population and we will use our technological assets to protect our people and show Russia that we will hold them accountable.”
- Highlighting the other side of the narrative, Jake Chervinsky, head of policy at the Blockchain Association in the U.S., went as far as to call these concerns about crypto “totally unfounded,” as he explains in a Twitter thread that Russia, “can’t and won’t use crypto to evade sanctions.”
- Further echoing this sentiment was Ari Redbord, the head of legal and government affairs at crypto crime investigator, TRM Labs, who stated that it’s too late for crypto assets to be able to provide enough liquidity for Russia and that the public nature of blockchains is already a sufficient deterrent for those seeking to circumvent sanctions. He stated, “Russia cannot use crypto to replace the hundreds of billions of dollars that could be potentially blocked or frozen.”
Despite many experts refuting the idea that crypto could be used to help Russia skirt economic sanctions, the U.S. and the E.U. are still increasing their regulatory scrutiny of digital assets. Many of the world’s leading crypto exchanges have decided to blacklist sanctioned individuals and organizations. However, Binance has refused the requests it has received to censor the accounts of “innocent” Russian customers.
