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Cryptocurrency is “More Convenient” than Cash and Society is Ready for Adoption, Head of the Central Bank of Russia Says

Cryptocurrencies are being used more each time in the field of geopolitics, transcending the image of being just an experimental technology promoted by some fintechs and enthusiasts. After drawing the attention of the G20, several countries began to evaluate the possibility of issuing their own cryptocurrency, however, no powerful nation had shown a real, concrete interest … until now.

According to the Russian news website TASS, the Bank of Russia is considering the possibility of issuing a national cryptocurrency, although they are not yet able to see this as a priority for the near future.

Elvira Nabiullina, head of the Central Bank of Russia believes that society is ready to use crypto, but the technology is not quite there yet
Elvira Nabiullina

In statements to the Russian press, the head of the Central Bank of Russia Elvira Nabiullina praised the technology behind cryptocurrency, putting the “crypto vs fiat” debate on the table: “It will be more convenient, it is electronic money for people, for citizens. Are we ready, as a society, to refuse cash?” – she said, flirting with the possibility of crypto winning the fight by adding that “digital currencies are in some sense the readiness of society”

Nabiullina also commented that the Russian government is evaluating this possibility even though the legal framework makes it difficult. She explained that besides the legal aspect, technologies must mature a little before cryptocurrencies can be considered a state policy:

“Indeed, the Central Bank Digital Currency cannot be realized immediately, however many central banks, including the Russian Central Bank, are exploring this possibility .. If we are talking about the national currency, which works as a whole in the country, that is, these are not private assets, of course, this requires that the technology allows ensuring reliability and continuity. Technologies must be mature, including distributed registry technologies “

Is Russia Tempted to Use a National Cryptocurrency for Strategic Reasons?

Since 2017, there has been much speculation about the government’s interest in issuing a “Crypto Ruble” but after several contradictory statements, it seems that the official position of the Russian government tends more towards the “Blockchain yes, Crypto no” kind of philosophy.

Just two weeks ago, Ms. Nabiullina talked about how the Russian bank was against the legalization of cryptocurrencies due to the risks associated with their volatility.

“We are against the legalization of cryptocurrency as a means of payment. We believe that there are big risks for those who hold cryptocurrencies, we need to protect our citizens from risky investments” She said to Russian outlet Pravo. But this problem would not apply in the case of stablecoins, much less in the case of a Central Bank Digital Currency or a state-issued cryptocurrency – that is, there is no inconsistency between this statement and the one issued two weeks later.

Vladimir Gutenev

Interest in using cryptocurrencies has increased after U.S-imposed trade sanctions intensified, affecting Russian commercial and banking activity – and draining Vladimir Putin’s patience. Russia’s State Duma member Vladimir Gutenev suggested the emission of a gold-backed stablecoin used for mutual settlements. It is important note that in february this year, an oil-backed stablecoin was also proposed

The Central Bank of Russia reported in May a growth in its gold reserves, which went from 487 to 492 billion dollars in one month. This movement has placed Russia in the number one position among the biggest global purchasers of gold.

Also, recently a senior executive of the Venezuelan government also stated that both countries are discussing the possibility of using russian Rubles and venezuelan Petros (a cryptocurrency issued by Venezuela) as a means of payment in bilateral trades

Do you Think We Will See a “Crypto Ruble” Soon? Will Facebook’s Libra Coin help boost Russia’s interest in Crypto? Let us know in the comments below!

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Russia and Iran to Develop Own Cryptos to Reduce USD Dependence

Virtual currencies have reached an important number of citizens all over the world. They were able to help people to be more independent and have more freedom; with virtual currencies they were able to be the real owners of their funds. But some countries, including Russia, Iran and Venezuela, have been developing virtual currencies so as to avoid US sanctions, and more important, to reduce USD dependence.

Russian CryptoRuble, Venezuelan Petro, and Iranian…

Russia has been one of the first countries to propose the creation of its national virtual currency, the CryptoRuble. It was expected to work as a virtual currency to process transactions, speed up international payments, reduce costs and…yes, avoid United States possible sanctions.

The same happens with the Venezuelan Petro, which has gathered important attention all over the world, and investors trying to place their funds in one of the first ICOs conducted for a national virtual currency.

And Iran, which is now discussing with the United States about its nuclear plan, could be ready to develop its own virtual currency as well.

But what do all these countries have in common? Why are all of them so obsessed with virtual currencies? Is there any economic reason behind that?

Well, there are several explanations about why they want to build their tokens. But they clearly differ with the intentions that other countries may have regarding national virtual currencies, like Estonia, the United Kingdom (UK), or Canada.

The three countries mentioned at the beginning have something in common. All of them are against the United States and western states in different fields. And this is not just a mere opinion, but these are facts. Russia accuses the United States of being too invasive with the NATO near its country. Iran is negotiating a very controversial nuclear deal, and Venezuela has taken its country from the 4th place in income per capita back in 1980’s to one of the poorest in the world with its radical policies.

All of these three countries have also been sanctioned by western countries. Funds from important leaders and businessman have been blocked and political leaders are not welcomed in other territories.

National Cryptocurrencies are one of the easiest and most innovative ways to avoid these financial sanctions and reduce dependency on the USD dollar. Imagine Venezuela, Iran, Russia and other nations exchanging goods and services with a cryptocurrency that does not depend on the dollar. They would be able to avoid sanctions imposed by other countries.

While launching the Petro, Venezuela’s President, Nicolás Maduro, commented:

“Venezuela announced the creation of its own cryptocurrency. It will be called ‘Petro’ […] This will let us move towards new ways of international financing in order to allow the social and economic development of the country.”

It is clear that as cryptocurrencies helped individuals to be independent from states and governments, they are also helping other countries to avoid sanctions, get financed in the market, and keep their commercial activities with other countries from all over the world.

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Sanctions Showdown Looms for US and Cryptocurrency

Brian J. Fleming is a member of the law firm of Miller & Chevalier in Washington, D.C.

With governments around the globe cracking down on all aspects of the cryptocurrency market, it seems like new regulatory risks arise every day. Add U.S. sanctions to that list.

On Jan. 19, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the primary sanctions enforcer in the U.S., announced that any U.S. person dealing in Venezuela’s soon-to-be-introduced cryptocurrency, the petro, could run afoul of U.S. sanctions against the Venezuelan government.

Couple that with recent comments from U.S. Secretary of the Treasury, Steven Mnuchin, warning that the U.S. is determined not to let bitcoin wallets become a new version of the Swiss bank account, and it appears that the Treasury Department is poised to wade into cryptocurrency regulation in a major way.

Although the potential sanctions risks associated with cryptocurrencies are similar in some respects to money laundering and terrorist financing risks that have garnered attention recently, they present some unique challenges.

OFAC maintains a blacklist of persons and entities that are essentially prohibited from dealing with U.S. persons, U.S. goods and services or the U.S. financial system. Direct violations of U.S. sanctions, or assisting others in efforts to evade U.S. sanctions, can result in significant financial or, in egregious cases, criminal penalties. Companies inside and outside of the U.S. have ample incentives to guard against such violations, but the anonymity afforded by cryptocurrency transactions makes compliance with such restrictions difficult.

If OFAC turns its eye toward cryptocurrencies, however, it could be only a matter of time before it makes an example out of one or more entities in an effort to send a message to the market and create a deterrent effect.

Moreover, the public ledgers underlying cryptocurrencies may allow the U.S. government, quite readily, to investigate potential sanctions violations by identifying the details of specific transactions and parties.

What follows below is a brief overview of some cryptocurrency players that could be affected and how that impact may be felt.     


Just as exchanges have been a focal point of increased government scrutiny regarding fraud and other criminal activities involving cryptocurrencies, they also could be the natural starting point with respect to sanctions.

A greater focus on disrupting potential sanctions violators could mean that lawmakers and regulators demand greater transparency from exchanges, as well as parties that use them.

Because this tension between transparency and security (or anonymity) is growing more heated, exchanges themselves are going to need to wrestle with how they reconcile those competing interests and retain their identity in the marketplace. Exchanges that choose to ignore sanctions risks could find themselves subject to major penalties in the future.


Any sanctions risks affecting exchanges will necessarily flow to cryptocurrency investors, as well.

Although investors themselves may not be directly in the crosshairs of OFAC—unless they have knowledge that an exchange is violating U.S. sanctions—significant penalties imposed upon exchanges could result in assets being frozen or even exchanges being put out of business.

Savvy cryptocurrency investors should certainly consider sanctions and other compliance-related concerns when conducting due diligence to identify the most reliable and trustworthy exchanges.

Financial institutions

Banks are among the most risk-averse actors when it comes to sanctions.

They come by that aversion honestly, as major global financial institutions have been subject to massive penalties imposed by OFAC and other U.S. enforcers in recent years.

While sanctions risks associated with cryptocurrencies could be too much for more traditional banks to accept, even more forward-leaning financial institutions that have been receptive to the sector may be forced to reassess those risks.

Late last month, Nordea Bank AB, which operates in Northern Europe, confirmed that it was banning all of its employees from trading in cryptocurrencies due to the perceived risks. Despite the ban, Nordea’s self-service customers are still allowed to purchase cryptocurrency products through the company’s platform, although the bank does not recommend it.

It also has been reported recently that a number of Australian banks have frozen the accounts of cryptocurrency traders and blocked transfers to several bitcoin exchanges.  In both instances, these defensive actions appear to be driven by counterparty verification challenges and associated compliance-related concerns

Regardless of the specific reasons for the changes in policy, the inability to verify customers and counterparties—and the possibility of transacting with sanctioned parties—is precisely the type of blind spot that could lead to significant sanctions exposure for financial institutions.

Commercial businesses

As cryptocurrencies gain wider acceptance among commercial businesses, especially those in the e-commerce space, those entities will need to decide what measures are necessary to protect against sanctions risks.

Many U.S. businesses have adopted screening procedures to vet non-U.S. customers or counterparties and ensure that U.S. goods are not shipped to a sanctioned party or destination. How will U.S. businesses that accept cryptocurrency payments screen transactions appropriately?

It is an open question whether such screening procedures can be readily adapted to vet transactions conducted using cryptocurrencies. If adaptation is too costly or ineffective, then businesses may reevaluate the benefits of accepting cryptocurrencies in the face of clear sanctions risks.

Government-backed cryptos

There are many reasons to be skeptical of Venezuela’s petro and Russia’s cryptoruble, but sanctions should be near the top of the list.

High-ranking government officials in both countries have publicly acknowledged that their planned government-supported cryptocurrencies are responses to U.S. sanctions against those countries and an effort to circumvent the reliance on U.S. currency in certain industries.

In other words, these countries have admitted they are attempting to evade U.S. sanctions.

With respect to Venezuela, OFAC has already made clear that such currency is essentially off limits to U.S. persons. One can imagine a similar fate may be in store for the cryptoruble should it come to fruition.

Additionally, for any non-U.S. persons considering whether to use, accept, or invest in either currency, they potentially could be branded by OFAC as foreign sanctions evaders, which would subject them to sanctions, as well.

Russian flag behind fence image via Shutterstock.

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