Ukraine recently demanded to “sabotage” Russian cryptocurrencies due to the ongoing war between the two countries. Among many, its European allies are also expressing growing concern that Russia will use cryptocurrencies to circumvent Western sanctions.
But, paradoxically, it seems that one of the biggest advocates for banning Russians and regular financial institutions from accessing cryptocurrencies is actually the Central Bank of Russia, or CBR, itself. As local news site tass.ru reported on Thursday, the CBR continues to defend its position on a proposal to ban the issuance, mining and trading of cryptocurrencies in the Russian Federation. The representative of the Central Bank of the Russian Federation stated:
He added: “Currently, the Central Bank supports the position previously voiced and published on the official website, so there is nothing to add today.”
During a war, countries usually have to increase their spending significantly, such as printing new money, to finance their war effort. However, this leads to severe inflation, which encourages people to exchange their local currency for foreign currencies (currently including cryptocurrencies) in order to protect their savings.
But this, in turn, would create significant selling pressure on the local currency, drive up exchange rates, and hamper efforts to finance the war. As a result, countries typically impose strict currency controls during times of war, as Russia and Ukraine have already done. Thus, the disadvantages of cryptocurrencies, which destabilize the ruble and indirectly paralyze Russia’s military actions, are likely to outweigh the benefits of using cryptocurrencies to avoid sanctions.
According to a report published by Arcane Research this week, Tether ruble (USDT) trading volume on Binance hit an all-time high of $35 million. Social media users in Russia seem to be very concerned about the devaluation of the ruble and how cryptocurrencies can help them protect their savings. User Roman Buhen wrote:
“You have to buy something [digital currencies]; The ruble will soon be cheaper than toilet paper. “