December 2, 2022

Russian financier could turn to crypto to sidestep sanctions

Experts believe Russia could use cryptocurrencies to bypass US- and European-imposed sanctions targeting Russian banks, technology companies and aerospace operators—a wide swath of the country’s economy—following Russian President Vladimir Putin’s unprovoked invasion of Ukraine, Casey Wagner writes in Blockworks.

Leah Wald, CEO of crypto asset manager Valkyrie Investments, said “the likelihood they could make such a pivot is very high.” Using digital assets instead of US dollars would likely be a violation of the sanctions, legal experts say, but decentralized exchanges and marketplaces in other countries might offer a workaround.

“As long as they don’t use a US-regulated entity to purchase and move the crypto, I don’t think that it would be difficult [to avoid sanctions],” said David Tawil, president of crypto hedge fund firm ProChain Capital. Employing a number of different exchanges would also make it easier for Russian financiers to cover their tracks, according to Wald, a former World Bank analyst.

“Russian companies could quite easily use Russia-based exchanges or brokers as fiat on-ramps, and then transact in crypto across multiple decentralized exchanges or through other tools meant to conceal the source of funds,” she said.

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