How Russia aims to use Crypto to evade sanctions after its war against Ukraine

One of the most interesting things to observe in the crypto sphere during the past month, after the Russian invasion of Ukraine started is what possible role crypto could play in this situation. In general, it will not be easy for Russia, Russian citizen, and its oligarchs to freely or easily use reputable crypto exchanges as on and off ramps to evade sanctions.

Despite that, there are some ways in which Russians have resorted to use crypto amid tightening sanctions packages that are building up on top of one another.

Dubai, has become a new safe heaven for Russian oligarchs who bring their money and crypto with them. Cryptocurrencies are then either liquidated of the chain (OTC) or used to buy properties in the Emirates.

Another point worth mentioning is that Russian citizens could turn into cryptocurrencies in order to access Western markets as their banks were being disconnected from the SWIFT payment system. Furthermore, cryptocurrencies were expected to be used more by Russian users due to the devaluation of the Ruble. Now, after aggressive interventions by the Russian government it looks like the Ruble has stabilized and near its pre war levels.

The small size of the ruble-crypto market and the the limited liquidity has been some of the main factors according to Moody's that make it difficult for the Kremlin to use crypto as a viable and efficient solution. Moscow has claimed that it will allow for payments of oil and gas to be made with crypto for what they consider as friendly countries (eg. those that have not imposed sanctions to Russia) but whether will countries opt to pay in crypto is another discussion.

Even if they do Kremlin linked crypto wallet addresses can be blacklisted or frozen by reputable centralized crypto asset exchanges that need to comply with money laundering laws.