According to analysts of international rating agency Moody’s, cryptocurrencies are not an effective solution for Russia to circumvent sanctions. This was written by the Investment Manager based on an expert report.

Analysts noted that the imposition of international sanctions on the Russian Federation after invading Ukraine raises the question of whether cryptocurrencies can be used to circumvent restrictions and “restore at least partially the ability of citizens and government to conduct financial transactions.”

Moody’s said that Russian citizens have recently started turning to cryptocurrencies more frequently for small transactions, with authorities proposing to allow Russian companies to pay in digital currencies for export-import transactions.

“Given the limited size and low liquidity of the ruble-to-crypto currency exchange market, crypto assets are currently not a very viable and effective solution to avoid sanctions,” the analysts said.

Among other hurdles, experts call the introduction of KYC/AML procedures by many exchanges:

“A centralized digital asset platform with well-structured verification and proper registration processes will be able to flag and blacklist accounts.”

Many major exchanges have introduced a number of restrictions for users in the Russian Federation on the backdrop of sanctions.

For example, Binance blocked the accounts of people associated with relatives of high-ranking Kremlin officials, and also imposed restrictions on residents of the Russian Federation whose crypto assets have a combined value of more than 10,000 euros at their addresses. He stressed that Russia cannot use digital currencies to evade sanctions.

The agency noted that various methods were used to circumvent these checks, from hiding transaction details or using unregulated platforms. However, Moody’s stressed that currently such activities are not large enough for the country to avoid sanctions.

Recall that the analytical company Elliptic said that the bitcoin industry should prevent the Russian Federation from circumventing restrictions.

The Central Bank of the Russian Federation has recognized the impossibility of avoiding sanctions with the help of cryptocurrencies, especially with regard to large payments.