Russian crypto holders have reportedly found simple ways to bypass sanctions and trade on overseas crypto exchanges, according to reports. After the war in Ukraine, Western leaders imposed sanctions on major Russian banks, effectively blocking account holders from using fiat on/off ramps at international exchanges. However, many exchanges only check self-reported transaction declarations instead of the Russian banks being on sanctions lists. As a result, it has been estimated that about half of all Russian transactions in the past six months were carried out via firms included on the US Treasury’s sanctions list, as reported by Kommersant.
Efforts to Close the Loophole
Experts believe that international exchanges will likely close this loophole to avoid repercussions from American regulators. Crypto exchanges now have tools that can detect transactions originating from Russian banks, providing enhanced security. However, despite potential efforts to close the loophole, a former Binance Russia/CIS executive argues that Russian crypto traders will continue to find alternative means to bypass sanctions. The majority of Russian token traders currently use sanctioned banks, but there are now more platforms that enable Russians to conduct transactions, particularly in the fast-growing Russian P2P market.
Increase in Crypto Transactions in Russia
The head of the financial regulator Rosfinmonitoring reported that the number of crypto transactions in Russia has tripled in 2023, reflecting the growing popularity of cryptocurrencies in the country. Additionally, transfer volumes have doubled in the same period, indicating increased participation in the crypto market. It is worth noting that Russian lawmakers have also announced the development of a tool that allows crypto miners to evade Western-led sanctions, further highlighting the country’s efforts to leverage cryptocurrencies and circumvent economic restrictions.
“About half of all [Russian] transactions” over the past six months “were carried out via firms included on the US Treasury’s sanctions list.” – Kommersant
“The majority of Russian token traders use sanctioned banks, but there are now more platforms that let Russians conduct transactions.” – Former Binance Russia/CIS executive
