Ever since the sanctions were imposed on Russia, rumors have spread that cryptocurrencies could be used to circumvent them.
And now the head of the European Central Bank has added to his concerns over the potential use of crypto by Russian entities.
Christine Lagarde claims that cryptocurrencies are being used “as we speak, as an attempt to circumvent sanctions set by many countries around the world against Russia.”
His argument hinges on the movement of the ruble in cryptocurrencies and stablecoins, adding that “at the moment, this is the highest level we’ve probably seen since 2021.”
Last month, volume increased between the Russian ruble and Tether (USDT), representing more than 2% of the asset’s global trade.
The increasing amount was believed to be in anticipation of sanctions imposed on Russia by the Western powers. The volume confirmed speculation that sanctioned Russian entities and individuals would turn to cryptocurrencies.
ECB executive board member Fabio Panetta echoed Lagarde’s concerns, arguing that the decentralized nature of cryptocurrencies created a loophole.
“The risk of misuse of crypto-assets to circumvent sanctions against Russia is an important reminder that these markets need to adhere to strict standards,” he said.
Concerns were also expressed by Elizabeth Warren and the Deputy Prime Minister of Ukraine, who called on cryptocurrency exchanges to impose a complete ban on the asset class.
The US Justice Department launched a task force to enforce the sanctions, while Coinbase announced that it blocked 25,000 Russian wallets for suspicious activity.
“I would quote my successor who recently said that ‘you can’t flip a switch overnight and run the G20 economy on cryptocurrency, there is no liquidity’,” said Michael Mosier, Deputy Director and Digital Innovation Officer. said. Financial Crimes Enforcement Network (FinCEN).
So what sanctions are being avoided?
Many industry pundits dispute Lagarde’s claims because of the extensive measures already taken by regulators. Binance and other exchanges have announced that cards issued by approved banks will not be accepted, while others have argued that the crypto market is not strong enough to support a massive move by Russia.
Chainalysis co-founder Jonathan Levine said that his company “has not seen evidence of Russia or Putin systematically using cryptocurrencies to evade sanctions.”
“I am the person who is behind all the numbers, I know how it happens, and it is impossible, physically impossible, to move large amounts from fiat to crypto,” said of the Blockchain Association of Ukraine. President Michael Chobanian said.
FTX CEO Sam Bankman-Fried also expressed disappointment over media reports that exchanges were not doing their part in enforcing sanctions against Russia.