Despite the widespread disagreement, governments are still cautious about digital currencies and their possibilities for sanction avoidance. The European Union is the newest to contemplate more substantial steps to regulate crypto assets. It fears that Russia would follow suit.
As the Financial Times told, EU finance ministers, as well as other officials, considered the possibility of cryptocurrency avoiding penalties. Christine Lagarde, president of the European Central Bank, and French Finance Minister Bruno Le Maire were among those who took part in the video conference call on March 2.
The commission intends to further strengthen the effectiveness of the sanctions by including digital currencies; however, it is uncertain how they will do so without inhibiting their utility for everyone else.
According to FXEmpire, leading trading platforms have officially pledged to freeze the accounts of sanctioned persons or institutions. However, this still appears to be insufficient.
European Union’s Crypto Crackdown
Lagarde, an anti-crypto central banker like many others, tries to impose laws on companies that deal in digital currency or offer crypto-related services in order to prevent them from doing business in Russia.
The EU’s economics commissioner, Paolo Gentiloni, believes that the current growth in cryptocurrency usage could be a strategy to circumvent the procedures put in place to freeze Russian assets.
As per Reuters, the European Commission presently investigates whether digital assets circumvent sanctions. According to an EU official, the spike in the price of many of these cryptocurrencies could be a reaction to efforts made to avoid the sanctions. The official went on to say that they were investigating the matter; however, there was no judgment.
Since the beginning of the Ukrainian invasion, cryptocurrency markets have managed to gain 13%. This is more than $200 billion in aggregate market capitalization.
Anti-crypto Senators in the United States, notably Sherrod Brown and Elizabeth Warren, have also called for stronger cryptocurrency regulations. In a message to Treasury Secretary Janet Yellen, they said that effective sanctions compliance regulation in the digital currency sector was vital. It considers that digital assets permit organizations to circumvent the conventional financial sector. It may potentially be a vehicle for sanctions noncompliance.
Russia Not Likely to Adopt Crypto
It has been widely published. It is now largely acknowledged that Russia is extremely unlikely to use Bitcoin or any other virtual currency as a currency in order to escape sanctions. Simply said, there is not much liquidity in cryptocurrency markets for a nation of its scale and currency needs. It has a sufficient supply of gold and Chinese currency to fall back on.
Still, officials are seeking for any reason to clamp down on the uncontrollable cryptocurrency market.
