- Some individuals and outlets are claiming that Russia can evade sanctions by using crypto
- While the state may try to use some avenues, its banking sector alone is worth more than the entire crypto market cap
- This makes wholesale movement impossible…unlike its $130 billion worth of gold
It didn’t take long, and here it is – suggestions that cryptocurrency is being used by Russia to evade sanctions. While it is highly likely that individuals are turning their rubles into bitcoin in order to avoid their crashing value, the ability for a nation the size of Russia to turn to crypto in any meaningful way is almost laughable, and yet this is the suggestion being made by some ‘experts’. This suggestion also seems to forego the fact that Russia has spent years accumulating a $130 billion stockpile of gold which, they seem to think, it intends to look fondly at instead of actually using.
Russia’s Financial Ability Being Squeezed
Russia has seen efforts to financially ostracise it increasing in recent days, with its abilities to access foreign holdings and trade with other nations being heavily restricted, including its removal from the SWIFT banking system. This has led, naturally, to the anti-crypto lobby crying that Russia could simply use the pseudonymity afforded by cryptocurrencies to bypass these sanctions.
The suggestion seems to be that the state could use the pseudonymous nature of cryptocurrencies to circumnavigate the traditional banking system which is, after all, its intention. However, while a few hundreds thousand Russians may be able to rescue their savings by leaping into crypto, it’s clear to anyone with half a brain that the crypto economy does not operate at the scale Russia needs to protect its assets. This was pointed out by David Carlisle, Director of Policy and Regulatory Affairs at Elliptic, in a LinkedIn post (I guess someone has to) yesterday:
The total assets of Russia’s banking sector are about $1.4 trillion – nearly the size of all crypto by market cap. There is simply no way Russia can use crypto alone on the scale it will require. Even prolific nation-state users of crypto like Iran and North Korea have *only* amassed about $1 billion in crypto each. That’s a drop in the bucket for Russia.
Gold Over Crypto?
Carlisle went on to say that Russia may well turn to crypto in some way, even through crypto mining, but that crypto on its own will in no way be able to help Russia out of the jam that is entirely of its own making.
Compare this to the $130 billion worth of gold that Russia has sitting in vaults within the Russian Federation. Will a rogue nation or two be willing to pick up a portion of that gold, potentially under market value? That’s a much more likely bet, and just as easy to hide for those who really want to.
