Russia May Use Crypto to Go Around US Sanctions

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The Biden administration is putting new sanctions on Russia over the current Ukraine conflict, trying to cut off foreign capital, The New York Times wrote Wednesday (Feb. 23).

Russian entities are prepared to fight back by making deals with any global actors willing to work with them — and using digital currencies to offset some of the worst effects.

The Times reported that the entities will be able to use the digital currencies to bypass control points from other governments, including transfers of money by banks.

“Russia has had a lot of time to think about this specific consequence,” said Michael Parker, a former federal prosecutor who now heads the anti-money laundering and sanctions practice at the Washington law firm Ferrari & Associates. “It would be naive to think that they haven’t gamed out exactly this scenario.”

This is an echo of a previous foreign conflict.

The U.S., in barring Americans from doing business with Russia after its invasion of Crimea in 2014, oversaw a massive hit to the Russian economy, costing it more than $50 billion a year.

Since then, there has been a massive uptick in cryptocurrency business, according to the Times.

The report notes that sanctions are usually a powerful tools. For the U.S. it’s particularly potent, as the dollar is the world’s reserve currency, used in payments all over the globe.

That said, the Times notes that the U.S. is aware of the potential for cryptocurrency to soften the blow from sanctions — and there’s been more scrutiny of digital assets.

U.K. Prime Minister Boris Johnson has also recently called for the “toughest sanctions” on Russia in response to the global crisis, PYMNTS wrote.

See also: Johnson Calls for ‘Toughest’ Russia Sanctions From UK Finance Industry

Johnson told this to finance industry reps, regulators and trade associations, after meeting with top bank heads and regulators.

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NEW PYMNTS DATA: ACCOUNT OPENING AND LOAN SERVICING IN THE DIGITAL ENVIRONMENT

About: Forty-two percent of U.S. consumers are more likely to open accounts with FIs that make it easy to auto-share their banking details during sign-up. The PYMNTS study Account Opening And Loan Servicing In The Digital Environment, surveyed 2,300 consumers to examine how FIs can leverage open banking to engage customers and create a better account opening experience.



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