Russia Can Look to Bitcoin and Cryptocurrency

Since Thursday last week, Russian President Vladimir Putin has decided Invasion of neighboring Ukraine Protected by a series of reasons and motives, particularly political “in principle”, the international map began to be redrawn as never before.

The alliance of countries associated with NATO, along with the United States and Japan, among others, decided to take coercive measures to contain Russia’s advance in Ukraine. Most penalties are particularly strong, but do not have the scope of SWIFT’s exclusion.

SWIFT, es el acronimo de “Society of Global Interbank Financial Telecommunication” Practically speaking, it is a global organization that serves as the basis for relations between states, since it controls the international network of contacts between banks and other financial entities.

This financial network, responsible for uninterrupted connectivity 24 hours a day, seven days a week, to more than 11,000 financial institutions located in more than 200 countries, transmits international payment order messages that keep the global economy going.

In fact, this system is used to conduct international transactions of large monetary volume, which serve to manage the exchange of goods and products between countries of the world. It also supports other interbank networks such as Visa and Mastercard.

After the dangerous situation that arose in Eastern Europe, with the invasion of Ukraine and the threat of a nuclear conflagration, Russia was partially excluded from the network, since at the moment the action affects a number of banks but not the entire Russian finances. order this way.

It is no secret that SWIFT has been used for years to prevent the flow of money arising from trade exchanges in those countries that engage in actions against international agreements and human rights in general.

Therefore, although it has been an effective solution that has prevailed since 1973 in favor of financial exchange between countries, it has also been used as a tool of political control against governments that violate international regulations.

Although excluding a country is certainly a really extreme option, as it affects not only the rulers, but also its citizens, the truth is that it has been effective on several occasions, leading states to negotiate agreements with the excluded country.

In the case of Russia, this procedure is not complete because it does not include its entire financial system. But, if it is contemplated extending its influence to include “Preventing the Russian Central Bank from benefiting from its international reservesIt is estimated at more than 630 billion US dollars.

In a statement issued by the White House and signed by the European Commission consisting of France, Germany, Italy, the United Kingdom and Canada, it was made clear that the action was against the Central Bank of Russia and the sanctioned private sector. banks.

“Continuing the blocking steps, in historical coordination, the leaders decided to separate the major Russian sanctioned banks from SWIFT, target the Russian Central Bank, and launch a joint task force to track the assets of sanctioned Russian and oligarchic companies.”

Such a strong measure will prevent the financial authorities from conducting transactions with the rest of the countries belonging to the SWIFT network, which logically causes a ban on imports and exports from Russia in this way.

However, while the effect of the sanctions would be effective in quickly causing the collapse of the entire Russian economy and government, it is also possible that this could lead to the emergence of a new crypto economy, as is already happening in other countries.

The regimes of Iran, Venezuela, and even in a very partial way, which have also been subject to international sanctions, have also resorted to the use of bitcoin, as well as other cryptocurrencies, in order to favor trading with other countries.

So far, these cryptocurrencies have helped sanctioned countries somehow bypass the financial embargo, which means they are excluded from the SWIFT system. However, in the case of Russia, the implementation of this can be more complicated.

Primarily, because sanctions go much further in their scope and terms. Although Russia may make the decision in the coming days to speed up the use and adoption of Bitcoin and other crypto activities in its country, the truth is that it is unpopular in Putin’s government.

For years, people close to the President of Russia have claimed that Bitcoin was created by the CIA to destroy the economies of countries, based on an urban legend that appeared on the Internet, in which Satoshi Nakamoto is said to be a code name. in that agency.

However, the adoption of Bitcoin and blockchain technology is unstoppable. It is being used more and more every day to protect and transfer value around the world, outside of the traditional financial system, due to its security, robustness and low costs of converting value into cash.

On the other hand, although Russia can use Bitcoin to conduct international exchanges, its commercial connections have been broken, making it almost impossible for it to use cryptocurrencies to make its payments, without consequences.

The transparency of the public chains of Bitcoin and cryptocurrencies in general, could expose people, companies or countries to sanctions in the future, because the idea of ​​an economic blockade is that Russia does not continue to use the money to finance it. war expenses.

It is only worth remembering how some blockchain analytics companies have the ability to track the funds of any wallet in the world, even after years, mixers are used, to hide the origin of the funds and their use in an unauthorized way. . Unknown.

An example of this is what happened with the theft from Bitfinex in 2016 that ended The arrest of a couple from New York By the Department of Justice (DOJ) in the United States, 94,000 BTC was seized, the largest amount confiscated by any government.

Another possibility that remains is that Russia and China will finally implement their own payment system, which has been developed together for a long time, in order to bypass international sanctions, as well as create a “safe” environment for other countries. untouchables

Also, Russia is likely to speed up the creation of its own digital currency, short for “central bank digital currency,” similar to China, in order to create its own monetary system that will compete with the supremacy of the US dollar as a global exchange currency. .

In any case, Bitcoin can be a solution for millions of Russian citizens who are affected by this coercive measure that is unable to distinguish the government of a country from its citizens, which affects them greatly due to sanctions.

Bitcoin will allow Russian citizens to use it as an alternative payment method and protect the value of their trading assets, as the impact of these sanctions is known to disrupt the Russian economy in general, its currency and financial system, starting Monday. .

Warning “Investing in crypto assets is unregulated, may not be suitable for retail investors and may lose the entire invested amount”

 

 

 

 

 

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