Recently, Ukraine has called for “sabotage” of everyday Russians’ crypto assets due to an ongoing war between the two countries. Among many, its European allies have also voiced mounting concerns that Russia may use crypto to bypass Western sanctions.
But ironically, it appears that one of the greatest proponents of barring everyday Russians and financial institutions from accessing cryptocurrencies is actually the Central Bank of Russia, or CBR, itself. As reported by local news outlet tass.ru on Thursday, the CBR continues to adhere to its position of proposing to ban the issuance, mining, and circulation of cryptocurrencies in the Russian Federation. A CBR official stated:
“The Central Bank currently supports the position that was previously announced and published on the official website. Therefore, there is nothing to add today.”
During times of war, nations typically need to dramatically increase their spending, such as via the printing of new money, to finance their military efforts. However, this leads to rampant inflation, thereby enticing individuals to exchange their local currencies for foreign currencies (including now, crypto) to protect their savings.
But this, in turn, would create heavy selling pressure on the local currency, driving up exchange rates and hamper war financing efforts. As a result, countries typically introduce strict foreign exchange controls during wartimes, as Russia and Ukraine have already done. Thus, the drawbacks of crypto destabilizing the Ruble and, by proxy, crippling Russia’s war efforts, could potentially outweigh the benefits of using crypto to evade sanctions.
According to a report published by Arcane Research this week, daily Tether (USDT) to ruble trading volume on Binance reached an all-time high of $35 million. Russian social media members appear to be deeply concerned about the falling value of the ruble and how cryptocurrencies can help them protect their savings. User Roman Buchyn wrote:
“You need to buy something [cryptocurrencies]; the ruble will soon be cheaper than toilet paper.”