Have the Russians been using cryptos on a massive scale to circumvent the sanctions imposed on their country? Or did they use the opportunity to move their crypto assets from one jurisdiction to a more favourable one? It’s hard to say, given the many different circulation patterns there are (peer-to-peer, exotic jurisdictions, blenders, etc.).
In this context, it is not easy to draw definitive conclusions. The US blockchain analysis company Chainalysis attempted it by looking at two exchanges that accept roubles: Binance and LocalBitcoins. Between July 2021 and June 2022, the fintech explains, "Russian rouble-denominated trading volume increased by 35% to $805m" in March/April, before falling back to below pre-Ukraine invasion levels.
For one expert, interviewed in the same study, many Russians have been looking for new places to withdraw their cryptos, such as the United Arab Emirates, Turkey and historically close countries like Kazakhstan and Georgia.
From €10,000 to zero
Since the cryptos for cross-border payments, other experts suspect that Iran and China are assisting in these financings of Russian companies. But that’s as far as the analysis goes.
In early October, in the eighth set of sanctions against Russia, the European Union reduced the €10,000 limit on Russian-owned crypto accounts to zero. "We realised that transactions were continuing on a certain scale" even after the imposition of measures in April, . Adding: "We wanted to make sure that these services were no longer rendered" by EU operators, while Switzerland appears to have followed the lead of the Europeans.
For Przemyslaw Kral, CEO of Zonda (one of the largest exchanges in Eastern Europe) , not everything seems so clear. Should the exchanges return the funds to their owners, block access to them, or freeze their accounts? In an email to its customers, Blockchain.com asks them to withdraw their funds by 27 October. Finland’s LocalBitcoin has invited its customers to do the same, but in a single, final transaction.
Less than 0.1% of customers for Bitstamp
Crypto.com or Blockchain.com also apply the sanctions. From Paypal’s position, it’s clear that all transactions had already been interrupted at the start of the conflict.
As for the two Luxembourg-licensed exchanges, while BitFlyer--which recorded €28m in revenue in 2021, of which an unspecified amount from Russia--had not responded to Delano’s sister publication Paperjam’s inquiry at the time of publishing, BitStamp--€59.39m euros in revenues in 2021, including €8.4m from the “rest of the world" region--indicates in its annual report that "in September, Russians represented less than 0.1% of its active clients and an even smaller share of the transaction volume.”
According to Banklesstimes, 17.3 million Russians hold crypto accounts (12% of the population) where they hold $240bn.
This article was originally published in French by and translated for Delano.