NEWS
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Crypto Weekly
War in Ukraine Disturbs Crypto's Fantasy of Stateless Money Such reports are grossly inaccurate. It is easy to imagine that crypto will enable some of Putin's cronies to move their own money undercover despite sanctions and capital controls. For an economy the size of Russia, it is not practical to transfer the necessary sums via crypto exchanges to conduct international trade. There is evidence that smaller sanctions targets, such as North Korea, also utilize these methods. The president's directive for a coordinated policy to encourage "responsible innovation" and make the U.S. a leader in technology while also addressing threats to national security, financial stability, and crime prevention was welcomed by bitcoin supporters. In the long run, the government's recognition of the significance of cryptocurrencies should be considered an endorsement, said Blockchain Association executive director Kristin Smith.
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he recent executive order signed by Joe Biden was advantageous to the crypto industry because it did not include burdensome new regulations or take an adversarial tone. Nevertheless, it pales insignificance when compared to another development-the international response to the Russian invasion of Ukraine. Its ramifications will be far more significant for crypto, and none of them are favorable. As evidence of the dollar's global dominance, Washington has imposed financial sanctions on Moscow, demonstrating its ability to damage foreign individuals, firms, and entire countries. Having learned how the international monetary system works has been a teachable moment. People who were unaware of this have recently discovered that the dollar is vital for all kinds of international transactions and that disconnecting a country's central bank and commercial banks will make that country an economic pariah on a global level. Additionally, the public has seen that
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dollar "weaponization" can be successfully implemented in concert with dozens of like-minded nations for a noble cause. Despite cheering millions sympathetic to Ukrainian independence, the revelations clash with crypto's anarchistic fantasy of stateless money controlled by no central authority while ensuring privacy for its users, eventually replacing fiat currencies and eroding the dollar's hegemony. The arguments of crypto skeptics have also gained strength. As a result of the education Congress members and their constituents have received in the last few days, it will be much harder for the crypto lobby, wellfunded as it may be, to make a case for encouraging the widespread adoption of dollar alternatives. Measures that challenge the dollar's primacy will be accused of aiding and abetting Vladimir Putin and his ilk.
Awareness of a new reality Russia cannot evade sanctions by using Bitcoin, Ethereum, or other crypto assets.
Crypto enthusiasts tend to be cockeyed optimists, as evidenced by such jubilance. Regulators and lawmakers in Washington are unquestionably moving toward prioritizing the three objectives in the Biden executive order: "Protect U.S. investors, consumers, and businesses...Mitigate systemic risk, mitigate illicit finance, and reduce national security threats." Efforts to harmonize and coordinate digital currency regulations worldwide are enhanced by a united front against the Russian invasion. Cryptocurrency firms and exchanges have opened shop in Hong Kong, the Seychelles, and the Cayman Islands to ensure "light-touch regulation." The Financial Stability Board, the Basel Committee on Banking Supervision, and the Financial Action Task Force, which have already advanced some proposals and are eager to tackle the issue more forcefully, will likely be able to threaten jurisdictions that fail to meet international standards with credible sanctions.
April 2022 | Volume 22
