It looks very likely that Russia could start using its crypto reserves if it cannot use the payments system used by banks worldwide – SWIFT. Analysts are already warning that Russian use of crypto could cause crypto failure and regulatory risks will go up.
There was talk of banning Russia from using the SWIFT interbank payments system after it invaded Ukraine. According to the Cowen Group for Research in Washington, if crypto is used by Russia, then support from political parties in the US will go down, causing a rise in regulatory risk. Currently, global trade is dominated by the US dollar, and it would be difficult for Russia to evade SWIFT by using crypto.
Bitcoin payments still require money to be converted to dollars before it can be transferred. This is critical to tracking payments and works highly in favor of crypto. When crypto exchanges uphold sanctions imposed by the US government, tracking evasions becomes easier because of blockchain technology. Political support would rally further in favor of crypto. According to analysts, this is the crisis that will determine how a government will view crypto payments and as a storehouse of value.
The pressure will be on wallet holders and trading platforms across the globe. The Department of Treasury already sanctioned two cryptocurrency exchanges in Russia last year. This step was taken because these exchanges processed transactions to do with ransomware attacks and many other illegal activities, after an investigation. According to the Treasury Department, crypto is still a major threat as it can easily be used to get around sanctions and carry on with business as usual. Unchecked, it will harm payments systems and the efficiency of sanction programs.
