Russia’s ability to employ cryptocurrencies to circumvent international sanctions is restricted by the limited size of the crypto market, according to Moody’s. Low liquidity, despite increased use of small transactions, is another obstacle to Russians exploiting bitcoin’s utility and the like.
Crypto Assets are not an option for sanctioned Russia. Moody’s Report suggests
Western sanctions, imposed on Russia over its invasion of Ukraine, have raised questions whether Russian citizens and government can utilize cryptocurrencies to bypass the restrictions and conduct financial transactions, Moody’s Investors Service notes in a report published this week.
The agency’s bond rating unit emphasizes the recent rise in small-sized transactions made by Russians. However, the authors state that crypto assets can be used to avoid financial penalties, despite being anonymous. They insist:
Given the ruble-to-crypto market’s limited size and low liquidity, we believe that, for now, crypto assets are unlikely to provide a viable and efficient solution for individuals to circumvent sanctions.
Moody’s recalls that Russian officials have indicated recently that Russia may accept cryptocurrency payments for its oil-and gas exports. Its experts believe that this option would be undermined by the current market size and insufficient liquidity.
Crypto platforms are often required to adhere to anti-money laundering regulations and understand your customer needs. They also check customers during onboarding. Analysts point out that a central digital asset venue would be able flag and disallow blacklisted accounts if it has a well-established screening process and compliant onboarding procedures.
While illicit activities by bad actors could continue unreported to authorities off central crypto exchanges or unregulated digital assets platforms, these activities are not large enough to allow sanctioned countries such as the Russian Federation to escape the Moody’s conclusions.
This story contains tags
circumvention, Crypto, crypto assets, crypto payments, Cryptocurrencies, Cryptocurrency, evasion, invasion, Moody’s, penalties, report, restrictions, Russia, russian, Sanctions, Ukraine, War
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