Crypto has Served as a Lifeline to Average Russians

By Cje95 | Congress and Crypto | 7 Mar 2022


Last week during Federal Reserve Chairman Jerome Powell's hearing on Capitol Hill several members of Congress pressed about rules and regulations in place to prevent Russia from using cryptocurrency to circumvent the sanctions the world has put in place. During all of this questioning, it dawned on me that a couple of things were either misunderstood by those asking or just plain misconceptions. 

 

Jumping into the biggest question that was asked was could Russia use crypto to beat sanctions and save itself?

Well, in theory, yes they could however it would be near impossible. The reason that it is so hard for them is because of the magical power of liquidity. For a country to beat sanctions with crypto and that is the scale and size of Russia the amount of liquidity that would be required would be just absurd and does not exist. The 10's billions of dollars that would be needed just does not exist there is not that much fiat out there. I guess they could try and work it out with trading pairs but then they run into a whole other issue.

 

The major cryptocurrencies are on an open-source blockchain with visible ledgers. This means that anyone, any company, or any country can track the movement of the crypto between addresses. If Russia bought $10 billion in Bitcoin it would be highly highly visible and because of that, there could be issues with it being carried out. Countries are able to have the serves in their countries shut down or freeze the addresses and so if those funds ever crossed the US or Allied servers they could be frozen on the spot. Some members of Congress made comments about how no one knows who is trading what when a crypto transaction takes place. The thing is though they have an address and then let's be honest if the government really really wants to dive into your address they will be able to eventually track you down via your location and find out who you are. 

 

Given these factors, it is just really unlikely that the Russian government would even try to do this because the best-case scenario is that they get some amount of funds but it just would not be enough to be worth the hassle. Investors and traders monitor whales and so whenever a significant sum of crypto is moved it makes news. It is not something that is hidden either not with the technology that most of these countries have instead it is put out in the open for all to see and thus be able to hold individuals accountable and prevent fraud and corruption from occurring. 

 

Crypto is Saving the Russian People Though

Last week when Bitcoin in particular really popped it was thought to be due to demand in Russia. That does not appear to be the case though from a few articles I have read (I cannot for the life of me remember where I was when I read these articles so if you know please comment below so I can give them credit). An interesting and pretty interesting thing occurred. Ordinary citizens in Russia were taking their Rubles and converting them into Bitcoin or Tether. This is what people have been talking about for a while now with the US inflation rate exploding though it is a little different with it being one current collapsing compared to others. 

 

Exchanges have been asked to block Russian users but for the most part that has not occurred. The exchanges did promise to work with the government to make sure that sanctions were not violated and Coinbase has frozen roughly 25,000 accounts that have been a part of suspicious activity. Coinbase did an in-house investigation and found these addresses were linked to people or entities that are sanctioned and so they froze the addresses and reported them to the US Government. This seems to be the best way to address this issue as it protects your average Russian user who has nothing to do with the war. Now if Russia starts providing funds to these people to up their trading that will raise suspicion and then the address can be frozen as well. 

 

While I have mixed feelings about exchanges freezing addresses that is one of the things you agree to with CEX as opposed to DEX. I also think most of us agree that the Russian war machine needs to stop with the targeted shelling of the exit corridors and residential areas. That is why I think that it is best that exchanges handle this instead of the government. Crypto has done a pretty good job regulating itself and responds much quicker than the government would be able to. 

 

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_

 

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Cje95
Cje95

Graduated from Texas A&M in May of 2020 had dabbled in crypto since 2017 but dove in at the end of 2019. December of 2020 packed up and moved to D.C.! Huge sports fan, space nerd, and international newsreader! Follow me on Twitter @Cje95_


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