Since Russia began its invasion of Ukraine, governments worldwide have raised concerns that cryptocurrency could be used to circumvent sanctions placed by Western nations.
The CEOs of two leading cryptocurrency exchanges have shared their thoughts on whether crypto can be an effective tool to circumvent sanctions. Binance CEO Changpeng Zhao (CZ) was quoted by the Guardian as saying:
Currently, the media and politicians are spending a lot of effort and focus on crypto and sanctions. The truth is, crypto is too small for Russia.
“If we look at the crypto adoption today, there is probably about 3% of the global population with some kind of crypto exposure (ie, owning some crypto),” Zhao continued. “Of those, most only have a small percentage of their net worth in crypto. Less than 10% on average. So, there is probably only less than 0.3% of the global net worth in crypto today. This percentage applies equally to Russia.”
The Binance boss added:
Another reason Russia would not want to use crypto is that it is too traceable. And governments around the world are already very adept at tracking it.
Furthermore, Zhao said using privacy-focused cryptocurrencies, such as monero, would not work either because the market capitalization of XMR is $3 billion compared with Russia’s GDP of $1.5 trillion.
Citing that every crypto transaction can be scrutinized by anyone, the Binance CEO stressed that crypto assets are “not an effective tool for illicit activities.”
Coinbase CEO Brian Armstrong shares a similar sentiment. He tweeted Friday:
We don’t think there’s a high risk of Russian oligarchs using crypto to avoid sanctions. Because it is an open ledger, trying to sneak lots of money through crypto would be more traceable than using U.S. dollars cash, art, gold, or other assets.
Meanwhile, the G7 countries, the European Union, and several other nations worldwide are taking measures to prevent Russia from using cryptocurrency to evade sanctions.
The U.S. Treasury Department issued a report last year stating that crypto reduces the efficacy of U.S. sanctions. The department is currently monitoring Russian efforts to evade sanctions using cryptocurrency.