Tech

Bitcoin allows Russia to escape sanctions according to Christine Lagarde

According to Christine Lagarde, current president of the European Central Bank (ECB), Russia would use cryptocurrencies to circumvent the economic sanctions applied by Western countries. It is based on the volume of rubles converted into Bitcoin and other currencies, which has reached a particularly high level in the country.

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This Tuesday, March 22, 2022, the President of the European Central Bank Christine Lagarde made an astonishing statement. According to the official, cryptocurrencies currently pose a threat in the context of the war in Ukraine. According to her, Russia uses digital currencies to circumvent economic sanctions imposed by Western countries.

She bases her theory on the large volume of rubles converted into cryptocurrencies in Russiawhich has reached a milestone not equaled since 2021. According to her, cryptocurrencies based on the blockchain, and which therefore escape the traditional banking system, are “certainly used as a means to try to circumvent the sanctions that have been decided by many countries around the world against Russia and specific actors”, like the Russian oligarchs for example.

Also read: Bitcoin, Ether – Ukraine received more than $52 million in cryptocurrency donations

Russia uses Bitcoin to evade sanctions: ECB

Christine Lagarde also adds that Bitcoin has become, as in Ukraine, the safe haven in Russia after the establishment of economic sanctions. Tether, a stablecoin issued by a private company that promises to hold assets equivalent to its issuance to ensure its value (one Tether for one dollar), has seen its popularity explode in the country as well.

As François Villeroy de Galhau, Governor of the Banque de France, said at the opening of the Bank for International Settlements (BIS) Innovation Forum on Tuesday, Bitcoin “does not constitute a store of value, but rather a speculative asset, somewhat akin to tulip bulbs in the Netherlands in the 17th century”.

Only and in the eyes of many experts in the cryptocurrency sector, Christine Lagarde’s version does not hold up. According to Jonathan Levin, co-founder of analyst firm Chainalysis, the cryptocurrency market is too small in Russia to facilitate any circumvention far-reaching sanctions issued by Western countries. According to data from research firm Kaiko, as of March 22, 2022 the combined trading volume of Bitcoin in rubles was less than $9 million in Russia. This represents a tiny fraction of the global Bitcoin volume, which is averages between 20 and 40 billion dollars.

Source: Bloomberg

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