• Sun. Aug 14th, 2022

US Treasury adds digital currency rules to Russia sanctions guidelines

No one knows if Russian President Vladimir Putin anticipated the severity of the sanctions his country would face when it decided to invade Ukraine. Nevertheless, they are now a reality, and to say that the penalties are strict would be an understatement.

The economic sanctions are so severe that the Russian ruble (RUB) has plunged to 112 to the US dollar, meaning one ruble is worth less than one US cent at the time of writing. The ruble plunged nearly 30% on Monday as the foreign exchange markets opened, sending shockwaves through the Russian economy. On top of that, bank accounts, yachts and properties belonging to beneficiaries of Putin’s regime have been or are being seized, and hundreds of billions of foreign currency reserves held by Russia have been frozen. by the central banks of Europe and the United States.

Now, the US Treasury Department has released new regulations regarding the rules for digital currencies and industry players. He warned exchanges not to facilitate transactions for people or entities on the sanctions list.

The guide says:

“All property and interests in property that is in the United States, that subsequently enters the United States, or that is or will subsequently come into the possession or control of any United States person of the following persons are blocked and may not be transferred, paid for, exported, withdrawn, or otherwise processed in… transactions or transactions that are deceptive or structured to circumvent United States sanctions, including through the use of currency or digital assets or the use of physical assets.

Clearly, the US government is well aware that largely unregulated digital currencies, some of which can be difficult to track internationally, offer a potential way for people on the sanctions list to circumvent them. While US Treasury regulations only apply to US entities, federal officials are asking stock exchanges around the world to comply. In all likelihood, we can expect similar guidance from government departments in the UK, Europe and elsewhere in the coming days.

Ukraine asks exchanges to block Russian users, but most say no

While US entities will quickly comply with Treasury regulations, most exchanges have rejected a request from the Ukrainian government to block Russian IP addresses and freeze Russian and Belarusian assets. The request came directly from Ukrainian Deputy Prime Minister and Minister of Digital Transformation Mykhailo Fedorov.

While some, like Ukrainian-born digital asset platform DMarket, complied with the call, others like Binance, Coinbase, and Kraken refused.

Binance said it was not going to “unilaterally freeze the accounts of millions of innocent users.” He reiterated that “crypto is supposed to provide greater financial freedom for people around the world” and that complying with it would be going against the very reason “crypto” exists. That said, Binance said it would take action against those on the sanctions list and aggressively enforce any new sanctions decided by the international community.

Kraken’s Jesse Powell said that while he has deep respect for the people of Ukraine, the company cannot simply block the accounts of ordinary Russian citizens without a legal obligation to do so. He pointed out that such a legal requirement could be imminent and that the Russians should be aware of it.

Exchanges in Russia and Ukraine reported a huge increase in volume as the sanctions took hold. However, Reuters reported that the majority of ruble-denominated trading was for Tether stablecoins. Perhaps ordinary Russians simply don’t understand the risks of owning USDT while its executives face fraud investigations from the DOJ and it adamantly refuses to publicly prove its holdings.

Could blocking the wallets of Russian citizens be counterproductive?

Many digital currency users have taken to social media to express their disgust at calls to block the wallets of ordinary Russians. After all, they are also victims in this situation. It is unlikely that any of them expect their currency to collapse and their savings to disappear before their eyes.

While the logic of the Ukrainian request is quite easy to understand; maximizing the pain of ordinary Russians and forcing them to revolt against Putin, some have pointed out that such a move is not only contrary to the values ​​of what the industry is supposed to stand for, but could also be counter- productive. According to this line of thinking, Russians who sell rubles against any currency, digital or otherwise, put greater pressure on the ruble and, by extension, on the Russian government.

BTC maxi morals and misunderstandings full screen

Seeing an opportunity to pump their bags in the face of a human catastrophe, some BTC maximalists on social media called on the Federal Reserve to print dollars and drive the price of BTC so high that Russians could not afford it. to buy, while others opposed it. even Putin’s inner circle is prohibited from using BTC if they wish.

Meanwhile, BTC Nostradamus wannabe Max Keiser, who spent months claiming that Russia’s impending invasion of Ukraine was a hoax, deleted around 1,500 tweets. Unfortunately for Max, Twitter user Crypto Whale saved screenshots and uploaded them to the blockchain to live forever.

As usual, we see that as long as there is a possibility of raise the number, BTC maximalists are ready to sell their souls to the highest bidder. Still, the loathsome calls to pump their bags during a war aren’t the only thing on display in the BTC country. As usual, the fundamental misunderstandings of Bitcoin, what it is and how it works are clearly visible.

Any Russians, Ukrainians, or citizens anywhere currently considering BTC or other digital currencies as a solution should know the following:

First, BTC and most other digital currencies are terrible for buying everyday items. In a situation like the one most ordinary citizens are currently facing, things like food, energy, and other life essentials will be extremely important. Since BTCers never really attempted to make it useful as a currency and instead promoted the HODL narrative, it is not widely accepted and is of very little use to those who might buy into it. Not to mention that it is also very expensive to transact in small amounts.

Second, BTC is not an inflation hedge. It is often promoted as such, but it is a very volatile and highly manipulated digital token with very little real liquidity in the event of a run for the exits in an emergency situation. People hoping for an inflation hedge should probably buy gold, given that it has proven itself and the world has shown its preference for it in the aftermath of sanctions. For most Russians, it is too late anyway. The major damage happened before most even had a chance to consider their options.

Clearly, the world prefers gold to BTC when you know what hits the fan…

Third, BTC and other digital currencies would be the worst possible options for oligarchs and all sorts of criminals to use to move money and evade sanctions. Why would anyone want to use a publicly visible ledger to move large sums of money that would surely attract attention and that they would have to cash out via fiat exchanges that are already looking for them? This notion that BTC is good for crime and for eluding government controls is one of the most detrimental barriers to true Bitcoin adoption.

And finally, poking western governments in the eye and promoting BTC as a way to evade sanctions in a potential war scenario is a surefire way to either ban BTC outright or aggravate regulators who are applying existing laws and rules. for the governance of digital currencies. Neither is a good long-term idea.

All told, we are in a predicament that could have world-changing implications. Yet BTC maximalists, in particular, only think about short-term profits from speculation. Suppose Jesse Powell is right and some legal order bans ordinary Russians from most scholarships. In this case, many could find themselves trapped in useless digital coins with no way to access their funds for the foreseeable future.

Conclusion

We can only hope that this Russian-Ukrainian conflict will be resolved quickly and with minimal loss of life and that digital currencies will continue to usher in a new era of financial freedom for all citizens of the world. However, promoting even more lies and misunderstandings about BTC to get a quick pump and aggravate regulators and governments yet again is not going to help achieve any of this. It is misguided, myopic and false.

Watch: US Congressman Patrick McHenry on Blockchain Policy Issues with Bitcoin Association’s Jimmy Nguyen

New to Bitcoin? Discover CoinGeek bitcoin for beginners section, the ultimate resource guide to learn about bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.



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