Russians are hoarding cryptocurrency as the noose around billionaire oligarchs continues to tighten

This week, Russia began a cryptocurrency boom as sanctions suffocate their economies. However, there is a problem in this plan that prevents it from becoming a comprehensive departure strategy. 

For billionaire Russian oligarchs, the going is about to become tougher. 

Previously, it was rather simple for them to conceal their money. Simply purchase a London football team and a super boat and relocate to Mayfair. Recent developments have shifted the rules of the game. 

Chelsea FC owner Roman Abramovich attempted to transfer his ownership of the club to a nonprofit foundation in order to protect it from sanctions, but only days later, it is up for sale. 

The US and its allies have only recently began their campaign against Russia's assets and banking system. This will exacerbate the difficulty of transferring money throughout the world, particularly for Russians who live outside the Russian Federation. 

Cryptocurrencies are introduced. 

While it is difficult to conceal a football club, concealing digital assets is considerably easier. On both sides of the conflict, volumes into bitcoin and US dollar stablecoins (the cryptocurrency equivalent of the US dollar) increased this week. Russians are unmistakably attempting to circumvent sanctions and the Rouble's demise. 

Russian ruble-to-bitcoin trading volumes have risen to a nine-month high. 

On Thursday, Coindesk reported that the amount of bitcoin in rouble increased to about 1.5 billion RUB. 

However, Russia is not the only country affected. Additionally, Ukrainians are purchasing cryptocurrencies at historic levels. 

It makes sense; war is detrimental to local currency values, and gold is notoriously difficult to secure when bombs fall and people flee. The harsh reality of war is that if you are forced to from your home, you cannot bring your assets with you. 

There is a legitimate case for wealth protection in cryptocurrency, and Ukrainians anxious about the coming months are transferring their valuables. 

Is Bitcoin the Saviour of Putin? 

Is it possible that cryptocurrencies may evade sanctions against Putin? No. 

Russia exports approximately 5 million barrels of oil each day, valued at $0.5 billion. While the crypto market is capable of handling that volume, it is highly improbable that Russia's clients have that much cryptocurrency. 

Additionally, there is no infrastructure for cryptocurrency-based oil contract settlement. That is not to suggest it will not be built; it will, however, take years rather than months. 

Which oil buyer is confident enough at the present to send bitcoin to Moscow in the hope that the oil tanker arrives on time? Once you've sent a bitcoin transaction, there is no way to reverse it. Because the transaction cannot be traced in the same way that it can on SWIFT, it would be a hit or miss proposition. That is acceptable when the stake is $5, but you might reconsider when the stake is $500 million. 

Suppressing Russian cryptocurrency purchases may be counterproductive. The cryptocurrency is required by buyers of oil; the Russians are merely recipients. As a result, to the degree that buyers are ready to circumvent sanctions, trade will continue. 

Russia's embrace of cryptocurrency 

Cryptocurrency ownership is quite low across Russia as a whole. Only 37% of 25-35-year-olds hold cryptocurrencies, and the percentages are lower in every subsequent age group. It is most emphatically not sufficient to run an economy or service the resulting shortages of imports. 

Additionally, there is a considerable distinction between "holding any cryptocurrency" and having sufficient access to digital assets to sustain one's existence. 

Indeed, while this week's crypto-trade volumes in Russia were negligible in comparison to the scope of sanctions, they were sufficient to alert legislators on both sides of the Atlantic, who are now pushing for action. This could dampen the recent price spike in bitcoin. 

The White House also weighed in, pleading with American exchanges for assistance in ensuring that cryptocurrency is not used to circumvent sanctions. The prospects are fairly bleak here, as crypto has accidentally stumbled into a geopolitical crisis, with potentially disastrous consequences in the short run. Especially for exchanges with a presence in the United States of America. 

However, both sides of the fight are making the longer-term case. Individuals desire self-sufficiency. Digital currency is advantageous for both oppressed and oppressor. Whether you agree or disagree, if something is useful, it will be utilised. Even those that we do not particularly care about. 

We can see the result in this week's increase in the bitcoin price. The market is speaking, and as we will soon discover, governments will not like what they hear.

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