With the Biden administration spearheading the enactment of economic sanctions against Russia for its invasion of Ukraine, the G7 (Group of Seven) countries are joining forces to assure its effectiveness.
Russia is reportedly using cryptocurrencies to maintain access to foreign capital and to evade and offset the international “punishment.”
G7 Vs Russia
But the G7 countries are committing to impose measures to make sure that the economic repercussions are felt by Russia through “restrictive measures, to cracking down on evasion and to closing loopholes.”
The G7 said in an official statement:
“Our countries have imposed expansive, restrictive measures that have severely compromised Russia’s economy and financial system.”
To be specific, this means that the G7 will ensure that Russian billionaires and their proxies are unable to avoid international sanctions through the usage of cryptocurrency.
Russian Crypto As Countermeasures
The US government has been keeping tabs on Russia as reports say that the latter is planning to trade crypto assets and still participate in the global financial system.
The Russian government is also set to launch its own central bank digital currency which will enable it to trade with countries without having to go through the American currency.
Russian firms have also launched a new technology to hide their transactions, even from third-party investigators. It will also secure their activities from blockchain recording mechanisms.
BTC total market cap at $735.89 billion on the daily chart | Source: TradingView.com
As a response, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a guidance directive on Friday which demanded financial institutions to prevent attempts by Russia “to use virtual currency to evade US sanctions imposed on Russia.”
Moreover, it highlighted that all US citizens shall comply with OFAC regulations, regardless of whether a transaction is denominated in traditional fiat currency or virtual currency.
According to the OFAC:
“U.S. persons, wherever located, including firms that process virtual currency transactions, must be vigilant against attempts to circumvent OFAC regulations and must take risk-based steps to ensure they do not engage in prohibited transactions.”
Bitcoin On Rough Sailing
Other countries are fully backing this US measure as the G7 group promised to prevent Russia from using crypto assets to circumvent the sanctions.
Since Russian President Vladimir Putin ordered an invasion of Ukraine, Bitcoin prices have been on a rollercoaster ride.
Bitcoin dropped to a low of $35,000 in the early days of the Russian attack. As of Monday noon, Bitcoin was still below the $40K mark, at $38,875.82, figures by Coingecko show.
Meanwhile, on Friday, crypto companies in the United Arab Emirates were inundated by requests to liquidate billions of dollars of digital currency from Russians who are seeking to protect their wealth from the ongoing war.
Featured image from Indo-Pacific Defense Forum, chart from TradingView.com