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The Almighty Buck United States

Russia May Use Cryptocurrencies To Evade US Sanctions (nytimes.com) 71

Posted by BeauHD from the cutting-out-the-middle-man dept.
"The availability of non-bank financial trading in cryptocurrency may allow Russia to avoid the worst of the sanctions coming after their invasion of Ukraine this week," writes Slashdot reader 14erCleaner, sharing a non-paywalled link to the New York Times article. From the report: On Tuesday, the Biden administration enacted fresh sanctions on Russia over the conflict in Ukraine, aiming to thwart its access to foreign capital. But Russian entities are preparing to blunt some of the worst effects by making deals with anyone around the world willing to work with them, experts said. And, they say, those entities can then use digital currencies to bypass the control points that governments rely on -- mainly transfers of money by banks -- to block deal execution. Sanctions are some of the most powerful tools the United States and European countries have to influence the behavior of nations they don't consider allies. The United States in particular is able to use sanctions as a diplomatic tool because the dollar is the world's reserve currency and used in payments worldwide. But American government officials are increasingly aware of the potential for cryptocurrencies to lessen the impact of sanctions and are stepping up their scrutiny of digital assets.

Banks have to abide by "know your customer" rules, which include verifying their clients' identities. But exchanges and other platforms that facilitate the buying and selling of cryptocurrencies and digital assets are rarely as good at tracking their customers as banks are, even though they are supposed to follow the same rules. [...] Should it choose to evade sanctions, Russia has multiple cryptocurrency-related tools at its disposal, experts said. All it needs is to find ways to trade without touching the dollar. The Russian government is developing its own central bank digital currency, a so-called digital ruble that it hopes to use to trade directly with other countries willing to accept it without first converting it into dollars. Hacking techniques like ransomware could help Russian actors steal digital currencies and make up revenue lost to sanctions. And while cryptocurrency transactions are recorded on the underlying blockchain, making them transparent, new tools developed in Russia can help mask the origin of such transactions. That would allow businesses to trade with Russian entities without detection.

In October 2020, representatives of Russia's central bank told a Moscow newspaper that the new "digital ruble" would make the country less dependent on the United States and better able to resist sanctions. It would let Russian entities conduct transactions outside the international banking system with any country willing to trade in digital currency. Russia could find willing partners in other nations targeted by U.S. sanctions, including Iran, that are also developing government-backed digital currencies. China, Russia's largest trading partner in both imports and exports according to the World Bank, has already launched its own central bank digital currency. The country's leader, Xi Jinping, recently described China's relationship with Russia as having "no limits."
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Russia May Use Cryptocurrencies To Evade US Sanctions More

Russia May Use Cryptocurrencies To Evade US Sanctions

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  • Crypto FUD (Score:5, Insightful)

    by haggie ( 957598 ) on Wednesday February 23, 2022 @06:23PM (#62297029)

    I'm all for cryptocurrency but the idea that Russia is going to move its financial systems to crypto to avoid sanctions is laughable.

    • The real question is whether cryptocurrencies are scalable to the level that Russia would need to actually effectively evade sanctions. And remember here, that cryptocurrencies are pretty bloody volatile, so I'd argue that it isn't exactly the safest way to move large volumes of cash around.

      • Re: (Score:2)

        by edis ( 266347 )

        The will be able to buy crypto by paying crypto, ha ha.

      • The real question is whether cryptocurrencies are scalable to the level that Russia would need to actually effectively evade sanctions.

        There are a lot of questions. It's not enough "to find ways to trade without touching the dollar." Lots of countries around the world are putting sanctions on. How is this supposed to work?

        Suppose you are a hay farmer, and someone calls you up and says, "I'll pay you double for your hay, but you have to accept cryptocurrency." What are you going to say? Even if you agree to do so, you could end up in jail for helping someone evade sanctions.

        Finally, whether it can scale to the level that Russia would need,

    • and lots of it too. You'd have to be naive to think they wouldn't use Crypto to launder money when it's so easy and there's so little oversight.

    • No, it is only moving the moneys of Putin and the oligarchs to cryptocurrency. They've already been amassing gold as a hedge against sanction, this is just one more step. The average Russian citizen however gets none of this except for encouragement to continue enriching the lives of their superiors.

    • Re: (Score:2)

      by gweihir ( 88907 )

      I'm all for cryptocurrency but the idea that Russia is going to move its financial systems to crypto to avoid sanctions is laughable.

      Lets call it "ludicrous" for a bit more accuracy, although that word is still far too weak.

    • There's a huge amount of misunderstandings about cryptocurrency. Crypto is a public blockchain visible and verifiable by anyone. You can track all value flows between wallets. While individual wallets can be anonymous, the transactions are not. Also, there are means to identify who a wallet belongs to, especially in the case of large actors, like crypto exchanges, banks or governments. It would be pretty hard for a state actor like Russia to keep their wallets secret, and all of their money flows would be t

      • First of all, the issue isn't Russia using a wallet as a state actor, it's the people who run it. Second, they have far more resources to set up a sophisticated operation of small accounts acting pseudorandomly to avoid detection than, say, some run-of-the-mill ransomware scammer. They have an entire bureaucracy they can farm this out to, with no external oversight because, in their own country, they are the oversight. Finally, all of this is far more effective than moving around cash because, so far as I c

        • You're not wrong. But don't underestimate the forensic capabilities of tracking on-chain activity. A large amount of new wallets being created within in a certain time period, funds being tracked back to Russian finance institutions, IP addresses originating in Russia... Crypto is happening on the Internet, and the Internet is being tracked and traced.

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      Why, North Korea does it? NK gets quite a bit of income in crypto currencies, either stolen outright or the proceeds of ransomware attacks. Crypto currencies also allow them to spend that money while avoiding sanctions.

    • yea but everythings good if it cracks down on crypto , you might not have noticed in the last year and coming - - - some elders seem to refuse the future and as usual try to choke it by holding on to the past with an iron grip. I never saw the deal , its fresh money from nothing, its like colonial economy without economy and definitely no less or more scams and Al Capones ...
      but i think its the part where they dont control it ... once Crotter inc owns 95% of all the worlds bitcoins the supreme commander
    • Should that actually happen then I think the Russians have failed to notice the US, and the EU, are fully capable of tracing cryptocurrency transactions and seizing funds.

  • Can't wait till we hear how 500 billions of US dollars worth of Russian rubles has been lost when the password was forgotten.

    • Well first of all those rubles will be worthless if Russia is disconnected from the world banking system.

      And if Russia goes all in on state-backed currencies like China's, wouldn't that be the same as just disbanding their own central bank and relying on the China's? Let's see how that works out.

      • Re:Expect news about stolen Russian Billions (Score:5, Insightful)

        by hdyoung ( 5182939 ) on Wednesday February 23, 2022 @07:08PM (#62297155)
        China and Russia are NOT best buddies. China views itself as the next hyperpower and considers Russia as a troublesome has-been neighbor that’s unreliable to do business with. If Russia winds up in a situation where it relies on China, it will be as a totally subservient role. Putin would have to do a LOT of public ass-kissing. Not likely coming from a guy who’s fancies himself the next czar of the new Russian empire.

      • Re:Expect news about stolen Russian Billions (Score:5, Interesting)

        by quonset ( 4839537 ) on Wednesday February 23, 2022 @07:15PM (#62297167)

        Well first of all those rubles will be worthless if Russia is disconnected from the world banking system.

        Currently, 1 ruble is woth 0.01 cents. Not quite worthless, but worth little to nothing anyway. The loss of billions of dollars from the cancellation of Nord Stream 2 will not help matters.

        Also, while Russia relies on oil to prop up its economy, it can't even meet its quoted goal of oil output as part of OPEC+. That's because it does not have the technological wherewithal to exploit its resources and with the West shutting off access to parts and materials, expect oil output to continue to shrink. And this is on top of the rampant corruption of the siphoning off of money from whatever is gained from selling oil.

        • Also: If we cut them off from SWIFT, which is primary a trade network denominated in US Dollars, we will INSTANTLY decrease the demand for dollars. 30% of Russian trade is currently conducted in US dollars. This includes everyday Russians buying groceries on international credit networks with credit cards. (They don't even realize it, but that's what the banks do with clearers,) Cancel SWIFT for Russia, and you cancel their trade with all western nations. This would immediately decrease the need for Russia
          • I still think we should cut them off though. There has to be a cost for this crap. Even if we have to pay some of it.
    • Here's hoping a Ukrainian hacker steals their crypto wallet.

  • How about NFT (Score:4, Funny)

    by mobby_6kl ( 668092 ) on Wednesday February 23, 2022 @06:41PM (#62297103)

    Let's make "shirtless Putin riding a bear" photoshop NFT the official currency of Russia

  • China's relationship with Russia may have "no limits" but they'll insist on being paid with real money. Nothing personal, Vladimir Vladimrovitch, it's just business.

  • Next thing you know someone will remind Putin that the Biden administration will be prone to concessions in negotiations if polling shows a bloodbath is likely at the polls this November due to rising fuel costs, inflation, and a stock market adjustment.

    Let's keep that talk to ourself, OK?

  • Crypto-"currencies" are a) useless as currencies and b) do not nearly have the volume needed for such a thing. Remember that most of the value is fictional and requires a buyer that is a fool to be actually realized.

    • Not to mention, even if they figured out a way to make it work, all you've done is found a way to make your evasion of sanctions (and the people who were on the other side of the deal) public.

  • Waiting for all the transactions to clear will cripple the Russian economy much more effectively.

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