SWIFT and cryptocurrencies – The European Commission announced in a press release dated February 26, 2022, a series of sanctions targeting Russia and which affect in particular its banking system and the assets of certain Russian personalities. While traditional finance could therefore be the collateral victim of Russian President Vladimir Putin’s ambitions for Ukraine, could new (decentralised) finance reduce the impact of the sanctions imposed by France and its partners?
Cryptocurrencies and the Ukraine-Russia conflict: can decentralization have a moral?
The measures taken by the European Commission against Russia include the withdrawal of an undisclosed number of Russian banks from the SWIFT interbank messaging network. This exclusion will greatly complicate Russia’s ability to carry out cross-border transfers.
The European Commission goes even further in its attack on the Russian banking system. She also wants cripple the assets of the central bank of Russia in such a way as to make it impossible to liquidate the institution’s assets. Vladimir Putin will thus not be able to use the reserves of the central bank to stabilize the value of the ruble or even to finance the invasion of Ukraine.
Another measure targets Russian officials and elites as well as their family members. The European Commission wants freeze their assets abroad.
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Crypto-bypass
This set of sanctions which, once implemented, will affect the Russian financial system and the assets of certain important players in the country, could nevertheless in theory be ineffective if Russia and the persons concerned decide to use cryptocurrencies to circumvent these measures.
Quantum Economics founder and CEO Mati Greenspan had said that a “wealthy person” can “hold their wealth in bitcoins” to protect themselves from having their assets frozen.
Of course, the usual detractors of cryptocurrencies will always be able to criticize them by accusing Bitcoin (BTC) and its cadets of supporting the regime of Vladimir Putin. Such criticisms would of course be completely absurd for truly decentralized cryptocurrencies like bitcoin, which embrace no ideology, have no political color, and do not take sides in this kind of conflict. The Ukrainian government did not hesitate to also appeals to the crypto community to finance its war efforts to protect its territory.
In practice, the question now is whether cryptomonetary networks would be able to absorb part of the international transactions of a country whose banking system has been banished, and the influx of several tens or hundreds of billions of dollars of liquidity from Russian industrialists or billionaires seeking to shelter their assets.
The other question also relates to the role and position of cryptocurrency exchanges. Before this withdrawal from the SWIFT system is effective, will these exchanges allow the purchase of cryptocurrencies via their platform, thus facilitating on paper the circumvention of the sanctions of the European Union Commission by wealthy natural or legal persons? who are in the sights of the institution?
And even if sanctioned individuals still manage to convert a large portion of their sanctions-targeted holdings into cryptocurrency, will blockchain analytics companies and crypto exchanges flag these addresses and blacklist themor will they maintain a “neutral” position in this situation?
The paradox would be that the Russian central bank, which had recently called for the banning of cryptocurrencies, is now integrating them into the management of its assets in order to face the wave of sanctions that will affect the country’s financial system.
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