Russian Policy Flip Flop

Just weeks ago it had seemed that Russia was primed to ban cryptocurrency leading miners and investors to start to worry about the fallout. Thankfully I am not a Bitcoin miner because I think I would have been pulling my hair out. At the same time as this discussion was going on in Russia Kazakstan erupted in chaos leading to the internet being turned off forcing miners offline and in the United States environmentalists were calling on Congress to do something about the energy Bitcoin was wasting in their eyes. It is crazy to sit back and think that this all occurred in the last 3 to 4 weeks and for the issues to have resolved themselves. 

Current Status of Russia and Ukraine 

Really looking back at it so so much has happened as today marks the beginning of massive military "drills" in Belarus with Russian forces. For the last few weeks, I have written about the situation in Russia and what impact it could have on the crypto market (if you would like to read about my thoughts of the 2022 market with different scenarios laid out in regards to Russia and US crypto regulation here is a link). Without going into specifics too much the whole situation is really really getting out of control. Quite frankly I would not be surprised if this war ignites because of an accident at this point as the tension levels are through the roof and neither side is willing to back down. 

US Response

To try and understand why there was such a rapid and about-face move by the Russian Government I think it is vital to step back and look at all sides. Starting with the US government there is one glaring issue that if I was a world leader running afoul I would stop for a second before continuing especially in today's day and age. Republican and Democratic leaders in both the House and the Senate are working together on legislation specifically aimed at not just the Russian economy and country. Recent leaks have hinted the economy for the most part could be spared but rather corporations and individuals in the Russian government or connected to them. Uniting these two sides is not an easy feat yet here we are with it happening. 

From what I have heard from contacts is that assets, bank accounts, anything, and everything worth value outside of the country are on the table to freeze and/or seize. A reason that I point this out, in particular, is that Russian leader Vladamir Putin's Yacht left port in Germany early with incomplete renovations when sanctions began to circulate. His yacht has since arrived in the Russian enclave of Kaliningrad.

Kaliningrad Russia in Europe

In previous articles (part one and part two) comments were made about the situations that I feel were ill-informed. Looking at the Russian/US relations within the last two years in general they have been deteriorating. A few bright spots exist like with Nord Stream 2 where the Trump Admin had sanctioned companies involved but the Biden Admin had lifted the sanctions. It is almost important to note both Russia and the US governments are facing issues at home between COVID and economic recovery. Putin in particular is known to do things outside his border to turn the light off on issues at home. 

A lot of talk from Russia and people not wanting the US involved speak about and claim that a possible NATO expansion into Ukraine would put Russia at risk. What they do not acknowledge or admit though is the risk already faced by many European countries with Kaliningrad's existence and is continuous militarization by Russia. While isolated from the main country it has more than enough firepower and assets to cause absolute chaos across Europe with ease. Since Russia has not shown signs of scaling back there Ukraine wanting to join NATO isn't an invasion of Russia's backyard like Russia claims since they are already in Europe's!  

EU Response

While it has been an uneven response quickly you are beginning to see an emerging trend in the EU's response to what is going on. Hardliners against this aggression include several that you would expect like the Baltic States and the UK. Others like the French have scrambled to try and find a solution. One country though, the longtime leader really of the EU, Germany has been extremely quiet. This though is due to the dependence on natural gas from Russia to heat their homes in the winter. All of these countries above though have done roughly the same thing and it is sending top diplomates or people in government to Ukraine. Russia is smart and they are not going to risk somehow injuring another government employee as it would open themselves up to war with NATO as a whole. the EU continuing this revolving door of VIPs in Ukraine has helped push back against an invasion. 

Europe and the US are rumored to be either in agreement or nearly there in a sanction response. This was something that was beneficial to Russia as previously like in 2014 and even earlier this year there was no cohesive agreement in place to sanction Russia. That has now changed though as well as winter is nearing its end in Europe so the need for natural gas is going to decrease as well. 

Russia Crypto Savior

Among the various idea floated around to sanction Russia include removal from SWIFT the banking system used by member nations worldwide and even banning Russia from dealing in US dollars. Now Russia and China have announced plans to start dealing in Euros to help mitigate this issue however the EU itself could force them to stop that as well. Also as it stands right now the US dollar well it is good anywhere unlike the Russian Ruble or Chinese Yen. Crypto though is something that they can use to circumvent a ton of sanctions though as Iran and North Korea have shown over the years. With 11% of the mining power, Russia would be able to make good money mining Bitcoin itself as well as appeasing its population where $5 billion in crypto transactions have already occurred and the population has shown that it really enjoys it. Thus crypto serves as a double win by both appearing citizens at home while also providing a stable, scalable, and sizable income for the state as well. 

The West would not blanket ban crypto to prevent Russia from benefitting so by the time the governments pass anything several months alone would have passed completely changing what the field looks like. Again Russia is smart they know this so why penalize yourself when you can keep an ace in the hole to pull out if you need to. Also with adoption as opposed to bans further technological advancements can be made to keep up or try and surpass the West as well as maintain the blockchain talent that they already have! These reasons are some of many that cause me to pause when seeing the adoption by Russia. 

Please know I am not a financial advisor I am just someone who picked up on a trend and wanted to express it! Makes sure you always do your own research and never invest money you cannot afford to lose! If you enjoyed this article and would like to further support me below are a couple of referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_

Robinhood

Currently, Robinhood is offering an amazing deal where you can choose 3 different companies you want fractional shares of when you sign up using the link here and connect your bank account! You also are added to the crypto wallet waitlist and like always both stock and crypto trading is commission-free! 🤝 

Fold App

Offers daily wheel spins to win free sats daily! If you sign up for Fold with my link here you will get 5,000 sats for free!  

Unstoppable Domains

Sign up using my link here and get a free $10 credit towards your first $40+ purchase! 

Coinbase

Sign up for Coinbase and earn $10 of free Bitcoin when you buy or sell $100 in crypto with my referral here!

SMiles

If you are like me and walk to work every day this app rewards your walking with Sats! So far I have earned over 4,000 sats in just a couple of months walking to work! Here is my link!