Can Russia dodge the sanctions with crypto?

Can Russia dodge the sanctions with crypto?

Eyes of the world are fixed on the Ukrainian invasion, and politicians across the globe prepare their sets of sanctions against Russia.

US, Australia, New Zealand, Taiwan, European Union and Japan have so far imposed sanctions targeting Russian political and economy elite, its banking sector, key state-owned companies.

Ukraine is also pushing towards excluding Russia from SWIFT, a cross-border banking communications platform used by thousands of financial institutions in the world.

There is a rising concern, however, that the sanctions could be bypassed with crypto. Is it so?

While blockchain is borderless and allows anyone to create an address, it is also transparent. It means that it is possible to track concrete crypto flows, which could be linked to concrete people. Law enforcement all around the world is getting increasingly better at this, as recent successful operations show: crypto seizures from al-Qaeda, Colonial Pipeline hackers, REvil ransomware strain, Bitfinex theft…etc

So while regular Russians will be able to use crypto to connect to the world in case of a SWIFT block, those that are on the sanctions list will have law enforcement tracking their crypto flows and preventing centralized crypto providers from serving them.

A number of private initiatives is now being developed to do the same thing.

Crypto industry is getting mature, and as it increasingly becomes a part of our world, it is no wonder that regulators learn to monitor it.

The good news is that such endeavour means very precise targets: criminals, terrorists, and maybe tomorrow – putin’s support system.