Jake Chervinsky, policy head of the Blockchain Association, a crypto policy promoter in the US, posted an extremely lengthy Twitter thread on Wednesday. The thread includes more than 20 tweets, in which he has tried to explain that “Russia cannot and will not use crypto to evade sanctions.”
11/ FIRST: Russia’s access to a global payment network has nothing to do with the goal of primary sanctions, cutting Russia off from the US economy.
It’s illegal for US persons to transact with SDNs, period. It doesn’t matter if they use dollars, gold, sea shells, or bitcoin.
— Jake Chervinsky (@jchervinsky) March 1, 2022
Chervinsky explains this in the thread through three big reasons. The first of these is because Russia’s access to the global payments network has nothing to do with the primary sanctions to isolate Russia from the US economy. It is illegal for US citizens to transact with SDN. It doesn’t matter if they use Dollar, Gold, Sea Shell or Bitcoin.
17/ SECOND: crypto markets are too small, costly, & transparent to be useful for the Russian economy.
Crypto markets are thin to start with, & ruble trading pairs are rare. With Russia cut off from the world’s crypto industry, they can’t source nearly enough liquidity to matter.
— Jake Chervinsky (@jchervinsky) March 1, 2022
Another reason is that the financial needs of a country like Russia far exceed the current capabilities of the crypto market. Even if Russia can access sufficient liquidity, it cannot hide its transactions in such markets. He said “Russia cannot hide its tracks with crypto.” They further write that “Great privacy concerns aside, the transparency of the public ledgers and the analytics capability of US forensic firms is useless for evading crypto sanctions.”
19/ THIRD: the reality is Putin’s spent years trying to sanctions-proof Russia & crypto isn’t part of his plan.
His strategy included diversifying Russia’s reserves into yuan & gold (not crypto), shifting trade to Asia (not onto blockchains), bringing manufacturing onshore, etc.
— Jake Chervinsky (@jchervinsky) March 1, 2022
In conclusion, he pointed out that Russia has been trying to prepare itself to evade sanctions for years, but has failed to create any meaningful crypto infrastructure or finalize crypto regulations. Chervinsky said that Russia does not appear to be planning to use cryptocurrencies to mitigate the impact of sanctions imposed on the country.
“His (Russian President Putin) strategy included diversifying Russia’s reserves into Yuan and Gold (not crypto), moving trade to Asia (not on the blockchain), bringing manufacturing to the coast, etc.,” he wrote in the tweet.
However, Roman Bieda, Head of Fraud Investigation at blockchain research platform Coinfirm, said in a statement to Al Jazeera on Tuesday that “avoiding sanctions and hiding funds” imposed by North Korea, Venezuela and Iran. It is in general possible to use crypto for “.
But other experts told the outlet that Russia’s case is different due to the scale of sanctions, the sluggish crypto adoption rate and the lack of market depth.
The Cointelegraph report further cited the statement of Ari Redbord, Head of Legal and Government Affairs at crypto crime investigator TRM Labs, that the transparency of blockchain could become a natural deterrent to evading sanctions in this case.<!–
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