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HomeNewsPutin could plot to outsmart West and get around sanctions with Bitcoin

Putin could plot to outsmart West and get around sanctions with Bitcoin

Since Russia invaded Ukraine over one week ago the rouble has tumbled in value and ordinary Russians have attempted to transfer their wealth into bitcoin. Speculation has now arisen that the Russian state could follow the lead of its citizens and begin to buy up bitcoin as a way to bypass the latest salvo of sanctions from the West. In response to the war, the US and the EU are trying to more or less cut Russia off from international financial flows.

Russian banks have been excluded from the international payment system called SWIFT.

This means Russian banks will no longer be able to send money to or receive money from banks abroad.

Secondly, the foreign exchange reserves of the Russian central bank have been frozen, so the country cannot access the dollars and euros it accumulated before the outbreak of war.

Russia has very limited options to avoid the crippling effects of economic sanctions.

One option is to loo southeast towards China and begin to use Beijing’s CIPS cross-border payment service.

This option will see Russian international trade settled in the Chinese yuan, which will boost the yuan’s usage overseas, an outcome the Chinese would welcome.

The second option is to use cryptocurrencies such as bitcoin and ethereum.

All of the major cryptocurrency exchanges have refused to deny Russians access to trading in this way.

READ MORE: Financial stability risk as crypto moves with markets

However, the French Economy and Finance Minister Bruno le Maire said on Wednesday: “We are taking measures, in particular on cryptocurrencies or crypto assets, which must not be used to circumvent the financial sanctions adopted by the 27 EU countries.”

The US Treasury Department has asked major crypto exchanges to block sanctioned organisations and individuals, the Bloomberg news agency reports.

The price of bitcoin has risen steadily since Putin’s invasion of Ukraine.

Bitcoin rose more than 16 percent in one week since the invasion, however, there was a sharp plunge in the price today, down 4 percent to $39,200.

Additional reporting by Monika Pallenberg.



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