Nearly 4 million Ukrainians have fled their homes since bombs and bullets started flying on February 24, according to the Office of the United Nations High Commissioner for Refugees, also known as the United Nations High Commissioner for Refugees, most of them heading to neighboring Central Europe. . . . Meanwhile, according to Deputy Minister of Digital Transformation Alex Bornyakov, people from all over the world have sent more than $100 million in cryptocurrency donations to support Ukraine. To do this, on March 16, President of Ukraine Volodymyr Zelensky signed a law on the legalization of encryption.
Robbie Houben, professor at the University of Antwerp and co-author of a European Parliament study on the illegal use of cryptocurrencies and blockchains, published an article on March 1 titled “Crypto assets as a blind spot in sanctions against Russia?” There, he called for crypto-sanctions to further cut off funding for the Russian invasion of Ukraine. After all, Russia has spearheaded a multinational stable currency initiative with the BRICS countries (Brazil, Russia, India, China and South Africa) and the countries of the Eurasian Economic Union. This year, the initiative aims to issue central bank digital currencies (CBDC) that will be exchanged on smartphones outside of the SWIFT and CHIPS systems.
The Bank for International Settlements reported on March 22 that the “Dunbar Project” – a collaboration with the central banks of Australia, Malaysia, Singapore and South Africa – has confirmed that cross-border CBDC payments are technologically feasible.
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“The numbers show that cryptocurrencies are already widely used in the region, so the scenario is certainly not a fantasy one,” Hoppen states in his article. The Russian government estimates that at least $200 billion in cryptocurrencies, or 12% of the entire market, is owned by Russians. Blockchain analytics platform Elliptic has identified more than 400 virtual asset service providers using rubles to purchase cryptocurrencies, hundreds of thousands of cryptocurrencies associated with individuals or entities under sanctions in Russia, and 15 million Russian cryptocurrencies involved in illegal transactions. Adam Zarazinsky, CEO of Inca Digital, which provides digital asset data and analytics technology to the US Commodity Futures Trading Commission and the Department of Defense, explained to me:
“Since the Ukrainian invasion of Russia on February 24 on the Binance platform, Bitcoin/RUB trading has increased almost tenfold, USD/RUB trading has increased almost seven times, and then began to decline on March 7, when Visa and Mastercard withdrew similar five-fold Russian searches. . in Google, how to convert rubles into bonds for the same period.
When the Swiss government took the lead on March 4, Russia began to be hit by a wave of simultaneous sanctions targeting cryptocurrencies. Singapore followed on 5 March. Then came the EU on March 9th. On March 11, the G7, which includes Canada, France, Germany, Italy, Japan, the UK and the US, imposed sanctions “to hold Putin accountable for his ongoing attacks on Ukraine and further isolating Russia from the global financial system.”
Since many of the countries that have imposed these sanctions are still considering regulating cryptocurrencies, I wondered if their legal infrastructure would allow them to apply when it comes to cryptocurrencies. Here is what I found:
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Switzerland was the first to impose sanctions against Russia. On the same day, a member of the Swiss parliament filed a lawsuit against Credit Suisse for possible violations of sanctions related to the destruction of credit documents of a Russian oligarch who began transferring his billions of dollars in cryptocurrencies from Switzerland to the United Arab Emirates. Emirates. The United Arab Emirates passed its first nationwide cryptocurrency law on March 9th.
Isabelle Roche, press officer at the Swiss Federal Ministry of Finance, explained to me:
“The provisions of the March 4 Sanctions Decree apply to cryptocurrencies in the same way as to other assets, including freezing the assets of listed individuals and entities. Cryptocurrency companies/financial institutions must notify the authorities in connection with the application of cryptocurrency sanctions. the charges apply to violations of prohibitions under the Prohibition Act 2002, to which the Ordinance refers in section 32.”
James Reardon, senior officer at Geneva-based MLL Meyerlustenberger Lachenal Froriep, added: “For example, if a person fails – in accordance with paragraph 1 of § 15 of the order – to freeze cryptocurrencies held by a registered natural or legal person, that person may be subject to criminal prosecution.