Western sanctions, imposed on Russia over its invasion of Ukraine, have raised questions whether Russian citizens and government can utilize cryptocurrencies to bypass the restrictions and conduct financial transactions, Moody’s Investors Service notes in a report published this week.
The agencys bond credit rating unit highlights the recent increase in the volume of small transactions made by Russians. But the authors also say that despite their anonymous nature, crypto assets are not that useful when it comes to evading financial penalties. They insist:
Given the ruble-to-crypto markets limited size and low liquidity, we believe that, for now, crypto assets are unlikely to provide a viable and efficient solution for individuals to circumvent sanctions.
Moody‘s also recalls that officials in Moscow have recently indicated that Russia may accept payments in cryptocurrency for its oil and gas exports. However, its experts think that again the market’s current size and insufficient liquidity would undermine this option, too.
Furthermore, crypto platforms are often obliged to comply with anti-money laundering and know your customer requirements and they usually check customers during onboarding. “A centralized digital asset venue with well-established screening and compliant onboarding processes would be able to flag and disable blacklisted accounts,” the analysts point out.
While illicit activities of bad actors that occur off centralized crypto exchanges or on unregulated digital asset platforms could remain undetected and unreported to authorities, such activities are not large enough at the moment to enable sanctioned countries like the Russian Federation to avoid the restrictions Moodys concludes.