Crypto unlikely to rescue Russian economy

Off The Chain co-founder Eric Michaud has explained why he doubts that Russia can offset sanctions on its economy by turning to cryptocurrencies.

Michaud said that cryptocurrencies – as financial instruments – are still in their infancy making it impossible for them to serve as a meaningful substitute for FIAT money as things stand.

He added that they lack the agency and infrastructure to help alleviate what are some of the harshest sanctions imposed on a world’s economy.

Some nations have found a way, including Iran, which used its excess energy to quickly power up its crypto mining industry and produce bitcoin (BTC), which it then sold to prop up its economy.

Effectively, Iran has been able to bypass the sanctions and sell its energy reserves on the global market.

Commenting on Iran, blockchain consultancy Elliptic told The Guardian: “The Iranian state is effectively selling its energy reserves on the global markets, using the Bitcoin mining process to bypass trade embargoes”.

Not only that, but crypto exchanges are little interested in blocking crypto transactions. Even though Russia is waging a war on its democratic neighbor after it repeatedly tried to reach a diplomatic solution, the world of crypto has maintained its anti-status quo position.

Crypto exchanges are refusing to block financial transactions involving crypto, citing economic freedoms and the “innocent” caught in the cross-fire. The same case could be argued for the people of Ukraine who are caught in actual cross-fire.

Even if Russia can offset what’s happening to its economy (President Vladimir Putin is prohibiting foreign investments from leaving the country and Russians may no longer send money abroad exceeding $10,000), it will take years to properly recover.

Meanwhile, the Russian war machine will continue to gobble resources, which allegedly cost it RUB20bn per day, that was before the sharp devaluation of the ruble.

Whatever happens, Russia will have a very hard time finding a meaningful way to prop up its economy which will experience a sharp downturn.

Meanwhile, Russian state media continues to prosecute those who talk about war and never mentions the word “war”.

In those conditions, Russians are turning to crypto to try and offset the oncoming economic disaster.

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Written by Alex

Reporter

Alex is a well-rounded crypto writer who focuses on general market and legal developments. His main interest lies in how crypto gaming can become a more permanent part of the gaming landscape and how blockchain holds benefits to players they are not even aware of.

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