In reaction to Russia’s attack on Ukraine, US President Joe Biden issued penalties that did not include cutting Ukraine off from SWIFT payments or bitcoin transfers.
Biden said the US and its allies and partners will be enforcing sanctions intended at exacting “devastating costs” on Russia as a result of “Putin’s war of choice against Ukraine,” according to a White House release on Thursday. The United States’ financial system will be severed from Russia’s largest bank, Sberbank, and “complete blocking sanctions” would be imposed on VTB Bank, Bank Otkritie, Sovcombank OJSC, Novikombank, and their who had “enriched themselves at the cost of the Russian state.” As part of the penalties levied on Russia.
However, in response to European authorities, Biden told reporters on Thursday that the economic sanctions would not include shutting Russia off from the SWIFT network, which is a global payments system. Allowing Russians to use this option and appearing to be unable to restrict Bitcoin transfers could potentially reduce the impact of any penalties imposed by the US and its allies.
According to a Bloomberg story published on Thursday, Russian oligarchs might theoretically avoid US sanctions by purchasing products and services with cryptocurrency Andrea continuing to invest in countries where the invasion has had a more severe economic impact. While under US sanctions, individuals in Iran were allowed to seek crypto donations for flood victims in 2019, while Venezuelan President Nicolás Maduro was able to do the same.
“If a wealthy individual is concerned that their accounts may be frozen as a result of sanctions, they can simply store their wealth in Bitcoin to avoid such acts,” said Mati Greenspan, founder and CEO of Quantum Economics.
Ukraine’s foreign minister, Dmytro Kuleba, has argued that Russia should not be permitted to continue using the SWIFT system. President Biden stated that the sanctions imposed on Russia’s five banks will have “equivalent, if not greater, consequences than SWIFT,” but that the country’s removal from the network will be considered “as a possibility” if necessary. Neither Biden nor Kuleba mentioned the potential for crypto to be used to circumvent sanctions.
Biden’s efforts came after reports that Russia had launched an invasion of Ukraine, attacking a military airport near Kyiv and firing missiles at targets across the country. Biden appears to be going after Russia both economically and militarily with the increase of US soldiers to Germany and Poland in response to the attack.
However, according to a research published by the New York Times, sanctions may not have the desired effect.
“Russia has had a lot of time to consider this precise effect,” said Michael Parker, a former federal prosecutor. “It would be naive to believe they haven’t played out this scenario in detail.”
Although the situation in Ukraine is still unfolding, the attacks have had a financial impact on crypto and traditional markets. Following news of the invasion, the price of Bitcoin (BTC) plummeted into the $34,000s on February 24, but has since recovered to trade above $38,000 at the time of publication.
