As Russia declared a war on Ukraine, there are possibilities of further western sanctions to hit Moscow where it hurts most. At this critical juncture, crypto currencies or digital currencies may emerge as a powerful tool for the Kremlin to steer clear of sanctions.
Russia may use cryptocurrencies to blunt the impact of the sanctions through bypassing control points. It may also ink deals with anyone globally working with them via digital currencies. The learning comes from 2014 when the US imposed sanctions on doing business with banks, oil and gas developers of Russia after the latter invaded Crimea. Back then, the Russian economy was badly hit by the sanctions.
Russia had a lot of time to gauge the consequences of these sanctions and they must have planned ahead, former federal prosecutor Michael Parker said. Banks verify the identities of their clients by following the Know Your Customer (KYC) norms. Cryptocurrency exchanges and platforms do not follow the same strict rules for tracking their customers. According to experts, Russia possesses multiple cryptocurrency-related tools at its disposal.
The Russian government has started creating its own central bank digital currency. The central bank's digital currency can be used to trade with countries who are willing to accept it without converting it int dollars.