Russia Could Adopt Cryptocurrency as World Powers Consider SWIFT Ban

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As global authorities consider cutting Russia off from the SWIFT global interbank payments system as a sanctioned effort after it invaded Ukraine, pundits have warned that such action could drive Russian President Vladimir Putin towards cryptocurrency, as he scrambles to evade sanctions.

Cowen Washington Research Group analyst, Jaret Seiberg, noted on Frida: “We believe Washington is worried that Russia will use crypto to evade sanctions.” Seiberg added:

“If Russia is able to use crypto this way, then we believe political support in the US for crypto will fall, and regulatory risk will rise.”

The analyst also noted that considering most global trades get settled using USD it would be significantly difficult for Russia to bypass a SWIFT ban using crypto. Seiberg added: “Paying in bitcoin requires a conversion to dollars, which provides a way to track activity … That also works in favor of crypto.”

That said, the analyst explained that if Russia fails at using crypto to circumvent the SWIFT ban, regulators could see crypto as a viable tool. Seiberg added that political support for crypto could spike, specifically if crypto platforms helped uphold US sanctions against Russia.

The Cowen analyst noted: “For crypto, this could be the crisis that determines how the government treats its use for payments and as a store of value,” adding:

“Pressure would be on the trading platforms and wallets … This would not just be in the United States. We expect it also would apply in the U.K., EU, and in the western allies in Asia.”

The US Bans Two Crypto Exchanges from Russia Amid Ties to Illegality

Meanwhile, the US Department of the Treasury placed sanctions on two Russian cryptocurrency exchanges, Suex and Chatex, last year, after reports showed that they processed transactions tied to ransomware attacks and other criminal activities.

In a report released last year, the Treasury Department described cryptocurrency as a significant threat to sanctions programs, explaining: “We are mindful of the risk that, if left unchecked, these digital assets and payments systems could harm the efficacy of our sanctions.”