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The price of Bitcoin and several other cryptocurrencies went down as Russia declared war on Ukraine. The price of Bitcoin is declining and was trending at $38,471 at the time of reporting the news. Adding fuel to the fire is the current inflationary unrest created by the ongoing Russia-Ukraine war. The price decline primarily started when US intelligence revealed that Russia is on the verge of attacking Ukraine.
Biden administration have come up with new Russian Sanctions over Ukraine Invasion. Reportedly, the US has stated that Russia will have to face sever costs for attacking Ukraine. The new sanctions are made in a way to impose serious costs on Russia for invading Ukraine.
Biden voiced support for Ukraine. Consequently, the US has imposed limits in international trade with Moscow in a way to penalize Russia for invading Ukraine.
Biden stated, “Putin is the aggressor. Putin chose this war, and now he and his country will bear the consequences.”
The sanctions are also targeting Russian Banks which hold accounts with Sberbank, and now every asset these banks have in America will be frozen.
European countries have also imposed sanctions on Russia due to the Ukraine invasion. Several dozens of Russian banks, businesses and wealthy elites, and banning Russia’s national airline Aeroflot from the country’s airspace are part of their moves in penalizing Russia.
While Putin stated that Russia is aiming for “demilitarization and denazification of Ukraine.”
So, will cryptocurrencies do their job of lessening the impact of sanctions?
For those who do not understand sanctions, the government will come up with a list of people and businesses, it requires its citizens to avoid transacting with, failing which the citizens will be penalized.
Enforcement is mainly done by financial control particularly in sanctions. The government looks in to where money comes from and where it is bound. Anti-money laundering laws are applied to block transactions with the sanctioned entities and eventually the kind of transactions which are attempted are to be reported. Thus, banks work like the eyes and ears of the government.
However, cryptocurrency exchanges are not like the eyes and ears of the government. Most of them are decentralized. So, whether Russia will use cryptocurrencies as a method to bypass sanctions and to identify methods to trade without making use of the USD is something we have to see with time.
The Russian government are developing their own CBDCs and how they will make up for the revenue lost to sanctions is something we are yet to see.
