Cryptocurreny Wont Help Russia Evade Sanctions

According to Moody’s, Russia’s ability use cryptocurrencies to circumvent international sanction is limited by the small size of the cryptocurrency market. Low liquidity, despite increased use of small transactions, is another obstacle to Russians exploiting bitcoin’s utility and the like.

Moody’s Report suggests that crypto assets are not viable options for sanctioned Russia.

In a report this week, Moody’s Investors Service explains that Russia’s invasion of Ukraine has prompted Western sanctions.

The agency’s unit for rating bond credit highlights the recent rise in small-sized transactions by Russians. However, the authors state that crypto assets can be used to avoid financial penalties, despite being anonymous. They insist:

We believe that crypto assets will not be able to offer individuals a viable and effective way to bypass sanctions, given the market’s small size and low liquidity.

Moody’s recalls that Russian officials have indicated recently that they may accept cryptocurrency payments for oil and gas exports to Russia. Experts believe that this option would be undermined by the current market size and lack of liquidity.

Additionally, crypto platforms must comply with anti-money laundering regulations and understand your customer needs. They also check customers during onboarding. Analysts point out that a central digital asset venue would be able flag and disallow blacklisted accounts if it has a well-established screening process and compliance onboarding processes.

Although illicit activities by bad actors could continue to go unreported to authorities via centralized crypto-exchanges or unregulated digital asset platforms, they are not large enough to allow sanctioned countries such as the Russian Federation to escape the Moody’s conclusions.