Russia May Use Cryptocurrencies To Evade US Sanctions (nytimes.com) 71
"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."
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."
Crypto FUD (Score:5, Insightful)
I'm all for cryptocurrency but the idea that Russia is going to move its financial systems to crypto to avoid sanctions is laughable.
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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.
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The will be able to buy crypto by paying crypto, ha ha.
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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,
I'm sure they'll launder money through it (Score:2)
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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.
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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.
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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
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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.
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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.
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but i think its the part where they dont control it
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Expect news about stolen Russian Billions (Score:2)
Can't wait till we hear how 500 billions of US dollars worth of Russian rubles has been lost when the password was forgotten.
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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)
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Typical amateurish American political view, one country either dominate the other or become dominated
How's that saying? "Even a broken clock is right twice a day"?
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Re:Expect news about stolen Russian Billions (Score:5, Interesting)
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.
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it's barely able to claw itself back above $40K??
Not even that. It's below $37K (right now) Who wants their "currency" to fluctuate so wildly every day? The reason the U.S. dollar is the currency of choice is because of its stability.
How about NFT (Score:4, Funny)
Let's make "shirtless Putin riding a bear" photoshop NFT the official currency of Russia
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shirtless Putin riding a bear
In what position? Reverse sovkhoznica?
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What a great setup for an info drop - I'm talking about debt man, GDP means squat unless you throw in a countries debt alongside it.
I don't think you unders...
If you are wondering why the U.S. is seeing a large surge of inflation, you need look no further than our massive debt bubble.
OK, nevermind, you definitely have no idea what the hell you're talking. If you think "strong financial state" means "low debt", i invite you to look up the top 10 countries with lowest debt/GDP ratio. Spoiler: Tuvalu, Congo, Brunei, Timor and Kuwait are there.
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Russia's economy is a fraction of the size of the United States. Debt to GDP is in and of itself a terrible measure of economic stability. No one has any doubt that the US can support a significantly higher debt to GDP ratio than, say, Greece or even Russia. Even at the height of Soviet power, with a ring of satellite states that it could monopolize for trade purposes, it still couldn't economically outcompete the US, and the Russian Federation is a shadow of the Soviet Union's economic clout at its height.
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Their per capita GDP is $10k USD. That's third-world.
It's fucking tragic that their fucking fuhrer is busy trying to rebuild the empire he grew up in instead of the economic prosperity of his people.
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That's not the strong indicator you seem to believe it is - it normally means no one cares to buy your bonds.
There's a reason why countries with very low debt-to-GDP ratios are hardly economic workhorses.
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Except the U.S. is a special case for at least a couple reasons.
1 - It's the currency of international commerce. (For now, yes. But I don't see this changing in the next few years.)
2 - U.S. Bonds are considered very valuable because the U.S. does not default. U.S. bonds are a store of value world-wide. The U.S. wants to create more bonds (how it borrows money)? There will be a long line of individuals, companies, pension funds, and other countries that will buy.
U.S. bonds are a liability to anyone who o
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No, you don't add debt, estimating capability of particular economy.
While economy of Russia is not impressive, and is heading to be even less that, disbanding from progressive world.
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In the end Russia is actually in a much stronger financial state than most other countries...
Russia's entire GDP is smaller than Italy's. What the fuck are you babbling about?
Among other countries much smaller than it [imgur.com]. Both South Korea and Japan have larger GDPs than Russia, that's how much of a shithole third world country it is.
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GDP per capita for SK is 3x higher than for Russia.
Japan, 4x higher.
Not 30% higher. Not 40% higher. 300% higher. 400% higher.
Russia is third world now, and it's really pretty sad.
Shout Out (Score:1)
A Big FU to those downmodding me, when I was the only one telling you all that Putin didn't care what the U.S. could or would do - and why he doesn't care.
Maybe next time listen to some wisdom being dropped your way and fewer things will surprise you.
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The EU wants to ban PoW cryptocurrencies by 2025 (Score:2)
For real. [twitter.com]
[taken_good_luck.gif]
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Excellent. Was not aware of that.
Business is Business (Score:2)
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.
Stop putting ideas in Russia's head! (Score:2)
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?
Hahahha, no. (Score:2)
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.
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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.
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Indeed.
Well isn't that special. (Score:2)
Good! (Score:2)
Waiting for all the transactions to clear will cripple the Russian economy much more effectively.