With sanctions from the U.S. and other nations targeting Russia’s banking system and the possibility of it being excluded from the SWIFT payments network, there may be a pivot to Bitcoin and crypto assets.
On Feb. 24, United States President Joe Biden promised a wave of sanctions on Russian banks and financial institutions. He stated that after speaking to G7 leaders, there was total agreement in a combined effort to exclude Russia from the global economy by limiting its access to major currencies.
“We will limit Russia’s ability to do business in dollars, euros, pounds, and yen to be part of the global economy. We’ll limit their ability to do that.”
In addition to the sanctions, the exclusion of the country from the SWIFT payments network is also being considered. This will limit the ability of funds to be transferred to Russian banks from overseas.
British Prime Minister Boris Johnson pushed “very hard” to have Russia removed from SWIFT while Ukraine’s minister of foreign affairs, Dmytro Kuleba, tweeted:
“Everyone who now doubts whether Russia should be banned from Swift has to understand that the blood of innocent Ukrainian men, women and children will be on their hands too. BAN RUSSIA FROM SWIFT.”
Pivot to Bitcoin
SWIFT is a Belgian organization used by more than 11,000 banks and financial institutions worldwide, handling around 42 million messages per day. It has been criticized recently for being a slow, expensive and outdated mode of money transfer, however, it remains the industry standard.
There are concerns that ostracizing Russia from the global payments network will push them closer to China in developing their own system.
The adoption of cryptocurrencies such as Bitcoin would be ripe for the taking should Russia wish to avoid these crippling restrictions. Matthew Sigel, head of digital assets research at investment manager VanEck, commented:
“Neither dictators nor human rights activists will encounter any censor on the Bitcoin network,”
According to Bloomberg, Russian billionaires and oligarchs may well switch to cryptocurrencies in order to circumnavigate any financial blockades. Quantum Economics CEO Mati Greenspan added: “If a wealthy individual is concerned that their accounts may be frozen due to sanctions, they can simply hold their wealth in Bitcoin in order to be protected from such actions.”
Moving away from USD hegemony
Crypto can be sent directly from person to person without interference from any banks, centralized payments networks, or third-party intermediaries. As reported by BeInCrypto on Feb. 24, Russia has a robust crypto toolbox that it can use in such circumstances.
Vice President at Altamont Capital Management, Sahil Bloom, commented that a cutoff from SWIFT may have “longer-term second-order effects on Bitcoin and non-fiat currencies,” before adding:
“Russia may seek to circumvent the impact of the restrictions via a combination of its in-house system and a push away from the USD-reserve currency hegemony.”
Crypto markets have tanked 6% since the beginning of the week, and $200 billion was wiped out on the day the invasion of Ukraine began.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.