Two senior executives of California-based payments firm Ripple have expressed pessimism about Russia’s ability to circumvent sanctions using cryptocurrencies.
“There are real reasons why cryptos cannot be used on a large scale for Russia to evade sanctions,” Ripple CEO Brad Garlinghouse said in a tweet. According to Garlinghouse, if blacklisted individuals circumvent every security measure implemented, cryptocurrency platforms may risk losing their licenses. As Garlinghouse points out, crypto exchanges are trying to prevent this with a variety of measures, including strict know-your-customer (KYC) and anti-money laundering policies:
“For example, RippleNet has always made a commitment not to work with sanctioned banks or restricted counterparty countries. Ripple and our customers support and enforce OFAC laws and KYC/AML.”
OFACis an agency of the U.S. Department of the Treasury tasked with administering and enforcing economic and trade sanctions imposed by the United States.
Managing Director of RippleNet Asheesh Birla On the other hand, he thinks that liquidity will pose a challenge for Russia, as well as the fact that exit points of cryptocurrencies, such as centralized exchanges, must comply with OFAC laws.
According to the RippleNet chief executive, if the Eurasian country chooses to use digital assets like Bitcoin (BTC) to circumvent sanctions, the liquidity in the crypto market will be insufficient for Russia’s stock market (FX) needs.
“As noted by the U.S. Department of the Treasury – Russia processes approximately $50 billion in FX transactions per day. As the largest crypto, Bitcoin’s volume is usually around $20 to $50 billion per day. Russia’s needs will cover Bitcoin and more!
As of January 2022, Binance [kripto borsası] You can only send about $200,000 worth of Russian rubles at a time via Bitcoin, versus $3.7 million in Bitcoin/US$ and Bitstamp [kripto borsası] You can send $2.9 million via Bitcoin/Euro.
Even if you were sending around $200,000 per minute and assuming (very doubtful) that the Bitcoin/Ruble market was flexible enough to replenish liquidity immediately, you’re not anywhere near $50 billion a day. Also, the total average daily volume for Bitcoin/Ruble in the last month was only about $11 million…”