1. Is Cryptocurrency a safe haven and transfer of assets?
Cryptocurrencies, according to Bloomberg, are a potential tool for the Russian wealthy to dodge the impact of Western sanctions.
In reaction to Russia’s onslaught on Ukraine, US President Joe Biden announced on Thursday that “severe sanctions” had been agreed. The goal of these policies is to limit the capacity to transact in the US dollar and other major international currencies. In addition, the US has sanctioned five Russian banks.
The Biden administration will also go after a number of Russian billionaires and their families. The US president stated that the Kremlin’s policies benefit them and that they should share the pain.
These sanctions, on the other hand, may be less damaging to Russia, which is taking measures to legalize cryptocurrencies and is a major owner of digital assets. To evade sanctions, countries usually resort to physical force. According to Bloomberg, Russia can currently use cryptocurrencies and decentralized exchanges.
Sanctions put on Russian corporations and individuals by the US and its allies might effectively isolate them from the rest of the world. Russian billionaires who employ cryptocurrencies, which are based on blockchain technology that anonymizes transactions, may be able to evade these sanctions. They can use digital currencies to acquire goods, services, and assets outside of Russia without having to worry about being traced by banks or institutions.
“Bitcoin can be used by two people or organizations who wish to do business with each other but are unable to do so through a bank. If a wealthy person is anxious that his account may be hacked, he can change his assets to Bitcoin. Sanctions have put a stop to it “Mati Greenspan, the founder and CEO of financial consultancy business Quantum Economics, agreed.
Cryptocurrency owners can also create a wallet network using many exchange addresses, making it incredibly difficult to track any activity. Alternatively, they can use crypto exchanges based outside of the sanctioned region.
More than 17 million Russians, or 12% of the population, possess Bitcoin, according to data from Singapore-based payment platform TripleA. However, no Russian billionaires have stated whether or whether they own this money as of February 24.
According to the New York Times, experts claim that Russia has a slew of cryptocurrency-related techniques at its disposal to circumvent sanctions. The Russian government is also working on a cryptocurrency dubbed the Digital Ruble, which will be issued by the Russian Central Bank. They aim to be able to transact with other countries without having to convert to USD.
A spokesperson of Russia’s Central Bank told a Russian publication in October 2020 that the new “digital ruble” would make the country less reliant on the United States and better prepared to endure sanctions. It will allow Russian institutions to undertake transactions with any country wanting to engage in digital currency outside of the international banking system.
2. Russia changed the law to deal with this situation?
Before purchasing cryptocurrency, Russian investors must pass a test, according to the bill.
A new Russian law may require crypto investors to pass a test before purchasing digital assets beyond a specific threshold.
The bill’s authors also seek to regulate cryptocurrency mining and restrict miners’ access to low-cost energy.
The Cryptocurrency Industry Will Be Regulated Strictly Under This Bill
Russian legislators are working on a bill to overcome regulatory gaps in the cryptocurrency industry.
Ineligible investors who seek to buy cryptocurrencies with a total annual worth of more than 600,000 rubles ($7,700) may be subjected to special exams under the law.
Andrey Lugovoy, Deputy Chairman of Parliament’s Anti-Corruption and Security Committee, said the new law would “strictly regulate” the sector, according to the daily Izvestia.
The law is scheduled to be introduced in the State Duma during the lower house’s spring session, according to the Vice-President.
The bill will be considered with appropriate ministries, law enforcement agencies, and market participants before going into effect.
Any revisions will be voted on by a working group comprised of Duma members and representatives from government agencies, including the Russian Central Bank.
Other agencies are finding it difficult to adopt the same severe position on cryptocurrency as the money regulator.
The Central Bank of Russia advocated a ban on crypto-related operations including as issuance and trading in a recently released consultation, but the authorities rejected it. Moscow’s executive and legislative branches
Cryptocurrency Mining and Exchanges are now governed by new laws.
Andrey Lugovoy also disclosed that the new law will attempt to govern Russia’s growing crypto mining business, particularly in light of China’s crackdown.
Ordinary citizens, in addition to businesses, have benefited from discounted electricity, with crypto farms operating in basements and garages.
The bill, according to the congressman, should apply the same electricity costs to these miners as it does to enterprises, while emphasizing that mining should be halted with inexpensive domestic electricity.
The federal government moved in late December to empower regional governments to hike home electricity costs if consumption exceeded a particular level.
The bill’s authors intend to spell out exactly which businesses would be permitted to invest in cryptocurrency.
Authorized banks, cryptocurrency exchanges, and other digital currency exchanges will be among them, as long as they receive a special license.
Lugovoy did not elaborate on how foreign-based cryptocurrency trading platforms that want to operate in the Russian Federation will be subjected to a “unique” registration process.
Cryptocurrency is a great tool in unexpected situations where it has the ability to transact regardless of geography. The problem is that its power is too great to be able to influence geopolitical factors, so the future is quite uncertain when the ruling elite feels the need to change.
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