Moody’s: cryptocurrencies are ineffective for the Russian Federation under sanctions

The use of digital assets faces serious obstacles, given the low liquidity and small size of the Russian cryptocurrency market

06.05.2022 - 11:25

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What’s new? Analysts at the international rating agency Moody's Investors Service believe that cryptocurrencies are not effective in circumventing sanctions against Russia, despite the potential for continued anonymity. According to the experts, the reason lies in the limited size of the ruble-to-crypto exchange market and its low liquidity, Investment Executive reports citing a report.

Information on the Investment Executive website

What does the report say? Moody’s noted that Russian residents have recently started using crypto assets more frequently for small transactions, and the State Duma has proposed using bitcointo pay for oil and gas exports. However, because of the small size of the market, “these alternatives face important constraints,” the analysts reported.

In addition, crypto exchanges are implementing the know your customer (KYC) and anti-money laundering (AML) procedures, which makes it possible to identify attackers. The analysts have concluded that, in this case, attackers may be making transactions on unregulated platforms, but such activities have not gained sufficient scale to allow sanctions to be circumvented.

What events happened before? In late April, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva said that there was no conclusive evidence of the use of cryptocurrencies by the government, companies, or individuals to massively circumvent sanctions in Russia.

On 20 April, the Federal Taxation Service of Russia proposed a number of additions to the Finance Ministry’s draft law “On Digital Currency.” In particular, Russian companies may be allowed to make settlements in cryptocurrency when carrying out export-import operations

Earlier, Russian Prime Minister Mikhail Mishustin stated that more than 10 million Russian residents opened cryptocurrency wallets and transferred more than 10 trillion Russian rubles to them.

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