How countries circumvent sanctions through cryptocurrencies: a guide for Russia

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Russia on the sanctions map

At the beginning of March 2022, according to Bloomberg analysts, Russia was the leader in terms of the number of sanctions imposed against individuals and legal entities. As of the time of writing, the list of restrictive measures taken against the Russian Federation stopped at 5530.

Recall that the number of sanctions against Russia began to grow rapidly in early 2022 against the background of the escalation of the country’s political conflict with Ukraine. As a result, the Russian Federation bypassed Iran, Syria, North Korea, Venezuela, Myanmar and Cuba in the rating of sanctions pressure.

Previously, the leader of the rating was Iran. As of the time of writing, 3616 restrictive measures have been put forward against the country.

It is noteworthy that many states that have come under pressure from sanctions, one way or another, use cryptocurrencies to circumvent restrictions.

How countries under sanctions use cryptocurrency

It is possible that Russia will have to learn from the experience of other participants in the rating in order to ease restrictions with the help of cryptocurrencies.. The editors of BeInCrypto decided to find out exactly how the countries that fell under the sanctions use digital assets.

Iran

The country has been under sanctions pressure since 1979, since the Islamic Revolution. Iran has been sanctioned for a decade over its nuclear program. The restrictions were also aimed at countering terrorism. Here are just a couple of the sanctions Iran has faced:

• The Central Bank of the country was disconnected from the international interbank system for transmitting information and making payments SWIFT.
• The country banned the export of many types of equipment.

Sanctions against Iran were introduced gradually. This is largely why the country has managed to adapt the economy and other areas to the restrictions.

As of early March 2022, Iran surpasses Greece in terms of GDP per capita, a country that is outside the sanctions pressure.

Cryptocurrencies help Iran to cope with sanctions pressure. Mining of digital assets is popular in the country. Analysts from Elliptic believe that Iran is using bitcoin mining to avoid sanctions and “export” millions of barrels of oil.

At the same time, local authorities are appealing to Iranian citizens to invest not in cryptocurrency, but in oil.

Syria

The country has also faced sanctions ranging from export and import bans on energy sector goods to account freezes and trade restrictions. The reason for the introduction of restrictive measures was the disagreement of politicians with the actions of the Syrian ruling regime under the leadership of Bashar al-Assad.

The country does not have a ready legal framework for cryptocurrencies. At the same time, statistics show that local residents show great interest in digital assets, especially against the backdrop of growth phases of the crypto market. According to media reports, cryptocurrency is also used by local terrorist groups.

North Korea

As of this writing, North Korea is one of the most closed countries in the world. Local authorities faced active sanctions pressure against the DPRK in 2006. It was during this period that the first successful tests of North Korean nuclear weapons took place in the country.

There is a theory according to which the North Korean authorities are attracting North Korean hackers to organize the theft of cryptocurrency from crypto exchanges. The resulting digital assets need to be laundered somehow. In this North Korea, according to the US authorities, China is helping.

Interesting! The UN believes that the North Korean authorities are stealing cryptocurrencies to provide funding for their missile programs.

Venezuela

Venezuelan citizens use cryptocurrency as an alternative to hyperinflation-prone national currency. Also, digital assets have become a tool for the country to help circumvent Western sanctions. The US authorities condemn the regime chosen by the Venezuelan authorities. Restrictive measures are aimed at weakening it.

The Venezuelan authorities are trying to fight hyperinflation through the transfer of the economy to the national cryptocurrency. The first version of the digital asset that local regulators introduced in 2018 was called Petro. The project was exposed by Reuters journalists. They managed to find out that the information provided by the Venezuelan authorities that the cryptocurrency is backed by the country’s oil reserves is not true.

Despite the desire of the regulatory authorities to popularize Petro, local residents accepted the project coolly. In August 2021, the Venezuelan authorities made an attempt to revive the initiative by offering citizens a new asset – a digital bolivar. The process of its integration into the country’s economy started on October 1, 2021.

Myanmar

The country faced sanctions pressure in 2021 amid a military coup. The restrictive measures against Myanmar were a response to the repression of the authorities against peaceful demonstrators.

In December 2021, information appeared on the network that representatives of the current regime of the country allowed the use of the most capitalized stablecoin Tether along with the national currency. The regulators explained their decision by the fact that the transition to digital assets will simplify the collection of funds and making payments in Myanmar.

In February 2022, information appeared on the network that local authorities were planning to issue a national digital currency.

Cuba

Cuba first faced sanctions in 1960. Restrictions on the country were introduced by the US authorities against the backdrop of expropriation by local authorities of the property of American citizens and corporations. American regulators still continue to increase sanctions pressure on Cuba.

Cryptocurrencies as a decentralized tool, according to local regulatory authorities, are of “socio-economic interest” for the country. That’s why in August 2021, the Cuban authorities announced their intention to legalize digital assets. At the same time, Cubans themselves are actively using cryptocurrencies to circumvent sanctions.

Summing up

Russia is not the first and probably not the last country to face sanctions. The experience of other jurisdictions shows that the authorities and citizens of the Russian Federation will be able to relieve some of the pressure with the help of cryptocurrencies. At the same time, it is important to clarify that Russia leads in terms of the number of sanctions imposed on it. Therefore, the Russian Federation will probably have to make more efforts to reduce the pressure.

Also, the position of Russia, in comparison with other countries, worsens the speed of imposing sanctions. Unlike other states, the Russian Federation did not have time to adapt.

Recall that earlier the editors of BeInCrypto talked with experts about how exactly Russia can use cryptocurrencies to circumvent sanctions.

Disclaimer

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