Has cryptocurrency become Russia's "secret weapon" against international sanctions?

Earlier this week, Russian President Vladimir Putin ordered a "military operation" in Ukraine, which US Secretary of State Antony John Blinken called the biggest threat to Europe since World War II.

The international community responded quickly, with the United States and Western countries announcing a series of sanctions against Russia. The European Union imposed sanctions on Kremlin interest groups, while U.S. President Joe Biden denounced the intrusion as a "premeditated attack" by President Vladimir Putin, announcing more economic sanctions and export controls on Russian banks and state-owned companies.

So far, other countries have not removed Russia from the SWIFT international payments network, which is used by more than 11,000 banks in 200 countries to process cross-border payments. If Russia does get kicked out of SWIFT, perhaps Putin will consider using cryptocurrencies as a "secret weapon" to evade international sanctions.

Caroline Malcolm, director of international policy at blockchain analysis firm Chainalysis, told Decrypt: “As in the traditional financial system, Russia could use cryptocurrencies to evade sanctions imposed in response to the invasion of Ukraine.” But she added that cryptocurrencies are not a panacea for Russia to offer sanctions evasion: “Like the traditional financial system, the cryptocurrency ecosystem can take steps to identify and determine transactions by sanctioned entities.”

Crypto 'Broken' U.S. Sanctions?

In October, the Biden administration warned that cryptocurrencies — described by the U.S. Treasury Department as digital assets — could undermine the broader U.S. sanctions regime.

"These technologies provide malicious actors with the opportunity to hold and transfer funds outside the financial system... They also enable our adversaries to build new financial and payment systems to weaken the dollar," the U.S. Treasury said in a report. global role".

According to a United Nations report, North Korea has used cryptocurrencies to partially fund its nuclear and ballistic missile programs. Several countries, including the United States, Japan, Australia and the United Kingdom, have imposed sanctions on North Korea, which hired hackers to steal more than $400 million in cryptocurrency from exchanges. North Korea also has an active crypto mining program, including bitcoin and privacy-focused Monero.

Back in 2018, businesses in Iran were able to use bitcoin and other cryptocurrencies to evade sanctions imposed by the United States. “We chose cryptocurrencies because sanctions cannot stop our clients from paying for accommodation,” an Iranian travel agency told Decrypt.