- The head of the ECB, Christine Lagarde, expressed her concerns about the situation and considers cryptocurrencies to be a threat to the success of the sanctions imposed by the West on the Russian government over the invasion of Ukraine.
- U.S. President Joe Biden and his European allies are set to announce a new sanctions package against Russia on Thursday, the White House said.
The President of the European Central Bank, Christine Lagarde said that cryptocurrencies were being used in Russia to bypass the sanctions imposed by the West. The statement was made on Tuesday just hours before the White House announced a new round of sanctions against the invading country being prepared by the U.S. and the European Union.
Lagarde highlighted indications that some Russians may be using digital assets to circumvent the sanctions, imposed for the invasion of Ukraine, by converting rubles into cryptocurrencies and stablecoins, and then stablecoins into other digital assets.
In her dissertation, presented at the Bank for International Settlements Innovation Summit, she indicated that monetary authorities have observed an unusual increase in the volume of cryptocurrency transactions involving the ruble, as was reported by Bloomberg.
"When you see the volumes of rubles into stable, into cryptos, at the moment it is the highest level that we have seen since maybe 2021," the European official explained during the virtual conference.
Likewise, she asserted that cryptos “are certainly being used as a way to try to circumvent the sanctions that have been decided by many countries around the world against Russia and a particular and specific number of players."
Crypto Is “a Threat”
In her speech Lagarde did not directly single out the Russian government as the perpetrators of evading sanctions through the use of cryptocurrencies. She instead underlined that it is largely Russian companies and individuals that are using digital assets for this purpose.
Lagarde considers cryptocurrencies to be a threat to the sanctions achieving their objective, while also taking the opportunity to promote the benefits of the digital euro, the central bank digital currency (CBDC) that the ECB plans to launch soon.
The head of the ECB attested that CBDCs "are associated with safety, soundness, security, and benefit (from) the trust that is often associated with the national financial institution, such as a central bank."
She also warned that cryptocurrencies cannot be left as a loophole for sanctions.
European governments have “taken steps to clearly signal to all those who are exchanging, transacting, offering services in relation to crypto assets that they are being accomplices in trying to circumvent sanctions that would otherwise be applicable,” she emphasized.
On the Flipside
- From the very beginning of the war, it was thought that Russia would try to use cryptocurrencies as a way of trading its exports to evade harsh sanctions from the West.
- Crypto Exchanges such as Binance and Coinbase firmly stated that they had no intention to block their Russian clients, unless specifically ordered to do so by the U.S. and European governments.
New Sanctions Against Russia Disclosed During NATO Summit
On Tuesday 23rd, the White House revealed that President Joe Biden and his European allies would be holding an emergency NATO summit in Brussels on Thursday. There, Biden will also meet with the Group of 7 (G7) and attend a session of the European Council.
During the meeting with the European heads of government, a new package of sanctions against Russia will be announced. According to White House national security adviser Jake Sullivan, these new measures seek to prevent the Kremlin from circumventing the current economic sanctions.
This involves "not only adding new sanctions, but also ensuring that there is a concerted effort to crack down on evasion," the official was quoted as saying by Bloomberg.