September 24, 2022

Binance and Coinbase Explain why Crypto Cannot Help Russia

The CEOs of the two renowned crypto exchanges in the market, Coinbase and Binance, have stated that they do not believe Russia could make use of crypto as a tool for evading the sanctions that have been imposed by Western nations. Since Russia launched its military attack in Ukraine on February 24th, governments all over the world have expressed concerns that the country could use digital currencies to circumvent the sanctions that Western countries have imposed. The chief executives of the two exchanges shed some light on whether crypto can be an important tool for Russia or not.

Changpeng Zhao (CZ), the CEO of Binance, which is the world’s largest exchange in terms of trading volume, said that the politicians and the media were focusing on sanctions and crypto recently. But, the fact is that crypto is very small for Russia. He said that if crypto adoption was to be taken into account, then only 3% of the world’s population has had some form of crypto exposure, which means they own some crypto. Zhao went on to say that these people have only a small portion of their net worth in the form of crypto. In fact, he said that it was probably less than 10% and he added that this was also applicable to Russia.

According to the Binance head, another reason why the Russian government would not want to use crypto is that it is very traceable. He added that governments all over the world were also adept at keeping track of crypto. The CEO went on to say that even if Russia opted to use privacy-focused cryptocurrencies like Monero, it would still not be of much help. This is because the market capitalization of Monero is about $3 billion, as opposed to the GDP of Russia, which is around $1.5 trillion. The Binance chief executive said that anyone can scrutinize crypto transactions, which means that crypto-assets cannot be an effective tool for conducting illicit activities.

Brian Armstrong, the CEO of Coinbase also expressed the same sentiment. On Friday, the chief executive said that he does not think there is a high risk of Russian leadership using crypto for evading sanctions. He said that as crypto is an open ledger, using it for sneaking lots of money would only make it more traceable as opposed to using the US dollar, gold, art, or any other asset for that matter. Meanwhile, the European Union, the G7 countries and a number of other countries around the world are already taking measures that would help them in preventing Russia from using crypto as a means of evading sanctions.

Last year, a report was issued by the US Treasury Department, which showed that crypto does reduce the efficacy of the sanctions that are imposed on countries. Iran has been known to use digital currencies for evading sanctions. Currently, the Treasury Department is monitoring Russian efforts for evading sanctions via cryptocurrency, as the country continues its military attack in Ukraine, which means more sanctions.

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