Moody's assessed the possibilities of cryptocurrencies for Russia in the face of sanctions

Cryptocurrencies under sanctions are ineffective for Russia due to the limited market and the use of payment tracking mechanisms on exchanges, according to Moody's.Russian business asked to allow crypto assets for foreign trade

Cryptocurrencies will not be able to help Russia fight Western sanctions that restrict international financial transactions, according to the authors of a Moody's report received by RBC.

The imposition of international sanctions against Russia has raised questions about whether cryptocurrencies, including bitcoin, can be used “to circumvent sanctions and restore the rights of Russian citizens and the government’s ability to at least partially conduct financial transactions,” Moody’s analysts write, concluding that at present At the moment, crypto assets are unlikely to be an effective solution for these purposes.

Izvestia learned about the idea of ​​the Federal Tax Service to allow cryptocurrency for foreign trade

Due to the sanctions against the financial sector, not only businesses that have fallen under the restrictions, but also non-sanctioned companies face difficulties in conducting foreign trade settlements. At the end of April, the Federal Tax Service proposed to allow Russian companies to pay for export-import transactions in cryptocurrency. Similar measures were also proposed by deputies and representatives of big business at the site of the Russian Union of Industrialists and Entrepreneurs (RSPP). So, for example, the manager of Severstal Management, Gleb Khudanov, proposed developing a regulatory framework for the circulation of cryptocurrencies in Russia, allowing domestic legal entities to buy, sell and exchange them, and also use them as a means of payment for settlements with foreign counterparties.oil and gas.

Currently, the issue of regulating the cryptocurrency market in Russia is under study. The Ministry of Finance has developed a bill according to which cryptocurrencies can be allowed as an investment tool. In turn, the Central Bank advocates a complete ban on crypto assets in Russia. At the same time, cryptocurrencies are prohibited from being used on the territory of Russia as a means of payment.

What are the barriers to using cryptocurrencies

Limited size and low liquidity of the cryptocurrency market in Russia. On the exchange, the liquidity of the ruble/bitcoin pair is about $200,000. On over-the-counter trading services, which are used to hide transactions, the so-called mixing services, the liquidity is about $30 million per day. At the same time, the authors of the study note, according to the US Department of the Treasury , Russian financial institutions daily conduct international transactions in the amount of about $46 billion, 80% of them are made in US dollars. Implementation by crypto exchanges of measures aimed at combating money laundering and terrorist financing.Regulated crypto exchanges must comply with anti-money laundering regulations to track illicit transactions, the report says: “A centralized digital asset marketplace with well-established due diligence and appropriate registration processes will be able to track and deactivate blacklisted accounts. Once a transaction is flagged, law enforcement can track its history and follow its progress.” Moody's cites this factor as another reason why sanctions evasion is limited. Sanctions against some sites.On April 5, the US Department of the Treasury imposed sanctions against the largest darknet platform Hydra Market, which works for the Russian-speaking audience, and against the Garantex Europe OU cryptocurrency exchange. The latter is registered in Estonia, but, according to the US Treasury Department, it operated mainly from Moscow and St. Petersburg. More than $100 million worth of transactions on this platform are associated with criminal activity and darknet markets, according to the agency. The Finance Ministry release also notes that approximately 86% of illegal bitcoins received by Russian virtual currency exchanges in 2019 came from Hydra.

The State Duma allowed the recognition of cryptocurrency as property this year

Crypto restrictions for Russians

In the fifth package of sanctions, the European Union banned crypto exchanges from opening and maintaining wallets for Russian individuals and legal entities in the amount of more than €10,000. Large crypto exchanges take their sanctions obligations very seriously, said George Voloshin, director of the French branch of the consulting company Aperio Intelligence, For years, the regulation of cryptocurrencies has been tightened, which at the level of the FATF (Financial Action Task Force on Money Laundering) is equated to a store of value and fixed assets.

After the EU sanctions, the Binance crypto exchange decided to restrict access to its services for those users who live in Russia and have assets worth more than €10,000. For such clients, only the withdrawal function remained possible.

Another major crypto exchange, Coinbase, has warned users from Russia that their accounts will be blocked on May 31st. The company offered such clients to withdraw all funds or provide documents that confirm that they are not subject to EU sanctions.

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