BlocksInform
There have been many recent speeches about the possibility of Russia switching to the use of cryptocurrency if it is ostracized by the international banking system. However, that may not be the case and that may not be a good thing in any event.
This weekend, the United States and European nations decided to block some Russian banks from the rapid payment system. Consequently, long queues have been seen at ATMs in Russia and the ruble has plunged 30% against the dollar today.
Crypto industry analysts and experts opined that the country could switch to digital assets to avoid the banking blockade if this was the case. However, all disagree and some industry experts believe that Russia will not adopt cryptocurrencies in the near future.
Russia is not likely to embrace cryptography.
On Feb. 28, RippleNet general manager Asheesh Birla debunked this theory in a on why he thinks that Russia will not escape sanctions using crypto.
First, cryptography is becoming easier to track and it would therefore not be difficult to block Russian-affiliated addresses and portfolios. On Feb. 27, Ukrainian Vice Prime Minister Mykhailo Fedorov appealed to major crypto exchanges to begin doing exactly this.
Birla added that there is "just not enough global liquidity to meet Russia's needs", referring to the country's foreign exchange markets. He added that fiat on and off-ramps are also heavily regulated, making it harder to convert crypto-return into cash.
"Russia conducts nearly $50 billion in forex transactions a day. As the largest crypto, Bitcoin volume is typically between about $20-50b per day. Russia's needs would include bricks and mortar and more!"
In essence, the lack of liquidity in crypto markets is the main obstacle to Russian adoption for payments. It is also likely that President Putin has prepared for this and has partnered with other countries such as China to facilitate capital transfers.
"Russia has had plenty of time to prepare, to establish direct banking relationships in Asia and elsewhere to bypass correspondents," he added.
A bearish scenario
Industry analyst Alex Kruger commented that it would be “dreadfully bearish” if Russia adopted crypto for one primary reason:
“US regulators would be pushed to crush the industry as a matter of national security
However, others argued that if Russia was to load up on and cryptocurrencies to circumnavigate sanctions and distance itself from dollar hegemony, it would legitimize the asset class.
Cryptocurrency has turned out to be a form resistant to censoring money. According to blockchain analytics firm Elliptic, the Ukrainian government has raised almost $19 million in crypto donations since the invasion began.
