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Russia’s ability to employ cryptocurrencies to circumvent international sanctions is restricted by the limited size of the crypto market, according to Moody’s. Despite increased use in small transactions, low liquidity is another factor preventing Russians from exploiting the utility of bitcoin and the like.

Crypto Assets Not Viable Option for Sanctioned Russia, Moody’s Report Suggests

Western sanctions, imposed on Russia over its invasion of Ukraine, have raised questions whether Russian citizens and government can utilize cryptocurrencies to bypass the restrictions and conduct financial transactions, Moody’s Investors Service notes in a report published this week.

The agency’s bond credit rating unit highlights the recent increase in the volume of small transactions made by Russians. But the authors also say that despite their anonymous nature, crypto assets are not that useful when it comes to evading financial penalties. They insist:

Given the ruble-to-crypto market’s limited size and low liquidity, we believe that, for now, crypto assets are unlikely to provide a viable and efficient solution for individuals to circumvent sanctions.

Moody’s also recalls that officials in Moscow have recently indicated that Russia may accept payments in cryptocurrency for its oil and gas exports. However, its experts think that again the market’s current size and insufficient liquidity would undermine this option, too.

Furthermore, crypto platforms are often obliged to comply with anti-money laundering and know your customer requirements and they usually check customers during onboarding. “A centralized digital asset venue with well-established screening and compliant onboarding processes would be able to flag and disable blacklisted accounts,” the analysts point out.

While illicit activities of bad actors that occur off centralized crypto exchanges or on unregulated digital asset platforms could remain undetected and unreported to authorities, such activities are not large enough at the moment to enable sanctioned countries like the Russian Federation to avoid the restrictions Moody’s concludes.

Do you think Russia is trying to use cryptocurrencies to circumvent financial sanctions? Tell us in the comments section below.

2 thoughts on “Moody’s: Cryptocurrencies Unlikely to Help Russia Evade Sanctions

  1. First of all, I am thankfully not invested in TerraLuna. My heart goes out to everyone impacted by the price drop and I hope you seek the necessary help. Nothing is worth losing your life over.

    Terra's market dropped from 6.7 billion USD to 790 million USD in 24 hours. Do people seriously think that this sharp decline in price can be tied to retail dumping billions in a matter of hours? Bullshit.

    Few whales got together and exploited the mistake on Terras part, eventually wiping out retail money for their own profit. There is no evidence yet as it is too soon to be 100% sure, but there are many theories about potential exploits and some people have been warning in the past about it.

  2. Bitcoin just set a new record with its 8th red week in a row. Naturally, that's very concerning, but it's not that different from how the stock market as a whole has been doing lately. The S&P 500 just went 7 straight weeks red and the 8th week back only barely avoided being red. This is the most consecutive down weeks the stock market had since 2001, and while people are concerned, you don't see the same kind of panic you see in the crypto community. Because people trust in the market and they know that it will recover as long as they are patient.

    The point is that as crypto adoption grows, we have to accept that down periods are a natural part of the process and that they don't mean the sky is falling. If you're not in it to get rich quick off short term gains, down periods should be viewed as normal and even healthy for the market.

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