Thus, cryptocurrencies, like Bitcoin (BTC-USD), are supposed to be free from central government controls.
Question: Should Bitcoin, and other crypto-assets, prohibit the use of certain users for various reasons?
The most important reason right now is the possibility of banning Russia from using Bitcoin.
Jack McDonald, President and CEO of PolySign, believes,
“It’s going to be difficult for Russia to evade sanctions using bitcoin.”
PolySign makes crypto-asset storage software for exchanges and other customers.
Mr. McDonald goes on to write,
“Even so, blocked users could still find unregulated exchanges or even more opaque markets to buy and sell their cryptocurrencies.”
Thursday, February 24, Russia invades Ukraine.
Bitcoin price fell along with US stock markets.
As of 8:15 a.m. Thursday morning, the price of bitcoin was $35,244, down from nearly $39,000 the previous day.
The argument was that the bitcoin price seemed to move in tandem with the stock market. Some research indicated that the price of bitcoin had a correlation coefficient of 0.56 with the S&P 500 stock index, the highest correlation on record.
It wasn’t how it was supposed to be.
But then things seemed to change when Western sanctions were imposed on Russia, Russian banks and Russian oligarchs.
The price of bitcoin started to rise and hit $44,259 late yesterday evening, up more than 17% (according to Coinbase) from the recent low.
It seems, according to Paul Vigna, writing in the Wall Street Journal, that there has been an increase in the trading volume of bitcoins against rubles from the beginning of the week.
Mr. Vigna reports that according to Binance, the world’s largest bitcoin exchange, between February 20 and 28, about 1,792 bitcoins exchanged hands in the ruble/bitcoin trading pair, compared to just 522 over the nine days. previous ones.
Mr. Vigna goes on to say that,
“Crypto is popular in Ukraine and Russia. Ukraine ranked fourth on a global adoption index and a Russian government report estimates there were over 12 million cryptocurrency wallets held by Russian citizens with about two trillion rubles.”
Two billion rubles equals about 20 billion dollars.
Timo Lehes, the co-founder of the Swarm Markets trading platform, says that
“The situation in Ukraine has shed light on the value of bitcoin as an alternative monetary network.”
Thus, we see the price of bitcoin rising. And the price of most other cryptocurrencies, such as Ether, XRP, Avalanche and Cardano, have also increased in recent days.
This brings us to the discussion I have presented over the past few weeks and months about the independence of these crypto-assets and the role that regulators and governments will play in advancing digital.
Here we see directly, however, the threat that “crypto” poses to modern society.
The Chinese have banned crypto and moved to a central bank digital currency and are building the Chinese financial system around it.
And it is even believed that the United States will prevent the Russians from using the SWIFT network to process daily payment instructions.
But, as Oanda analyst Edward Moya reportedly said, Western sanctions and restrictions are
“strengthening the case for blockchain products that will compete with the SWIFT network.”
So, innovators move as opportunities arise.
Furthermore, crypto exchanges have been “greatly hesitant to adopt voluntary restrictions in Russian.”
Again, we see the problem.
The initiating technology that disrupts the economic system opens the door to all the other possibilities that can be associated with innovation. Then, the society, the government, the people must react to all these changes which are taking shape.
It then becomes a chase of governments and regulators against innovators.
In the current case, we see how a “rogue”, like Russia, can do something, face possible sanctions, but, at least partially, escape sanctions head-on by using the new innovation.
But governments are not the only case.
Just a few examples give us the picture. In September 2021, the US Treasury Department imposed sanctions on Suex, a virtual currency exchange, for its role in ransomware transactions. And the FBI announced last month that it was launching a blockchain analysis and virtual asset seizure unit.
Cheating is everywhere.
China got around some of that by banning cryptocurrencies.
What needs to be done?
Increasingly, national governments are being challenged by the technology movement and need to step up more forcefully.
The United States is lagging behind in this area and is only really starting to accelerate its efforts to be a digital and crypto player. But, it is better to hurry.
I guess bigger and bigger problems will arise. The Russian situation is perhaps only the beginning of this acceleration.
But Russia and Iran, for example, as well as China, are building their own digital currencies. The ability of these nations to “disrupt” the global financial world is becoming more real as we see cases of abuse popping up everywhere.
It can only get worse…until the United States…and a few others…know about their efforts to play in this world of information science.
The question is going to be, how much is the US government going to have to do to stop the cheating? Could China be an example in this case?