Cryptocurrency Sanctions Evasion ‘Already Happening’
A financial expert believes cryptocurrencies are already playing a role in Iran and Russia’s fight against economic sanctions – and says the states’ government may turn to miners for further assistance.
Per a report from Russian media outlet 360, Alex de Vries, Senior Consultant and Blockchain Specialist at PwC, says that “bypassing sanctions using cryptocurrency is a reality.”
De Vries is also quoted as saying, “It’s already happened in the past – for example when PayPal blocked transfers to [pro-Russian activists in] Ukraine in 2014. Cryptocurrency ownership spiked then. Blocking transfers to wallets was impossible. One would never even know that the recipient was in [Eastern] Ukraine because the system is considered to be pseudo-anonymous.”
A recent report claimed that Venezuelan authorities have been using bitcoin to dodge sanctions at an airport in the country since 2018, and now wish to expand their crypto-operations.
However, the 360 report concludes that cryptocurrencies are not a silver bullet for sanctions. De Vries stated that only individuals and smaller companies are likely to sidestep economic restrictions using cryptocurrency transactions. Larger corporations like as Boeing, said the report, “will not work with Iran in any case, even if they are paid in bitcoin.”
Instead, mining could provide another means of income for countries like Iran and Russia. Per Iranian news agency Mehr, the Iranian government “endorsed crypto mining as an industrial activity” on July 29, although would-be miners in the country will need to obtain permits from the Ministry of Industry, Mining and Trade. Miners must also pay tax on their earnings, unless, says the report “individuals export cryptocurrencies and bring back the revenues to the country.”
360 claims that there are thought to be some 148,000 mining rigs in Iran.
According to de Vries, Russia has no shortage of cheap electricity available, like Iran. But unlike Iran, Russian weather is much colder, a factor that would let it save a good deal on cooling costs – and “partially help” Russia fight sanctions.
As previously reported on Cryptonews.com, an American think tank recently claimed that so-called “rogue states” – countries that find themselves at odds with the United States – are increasingly looking to cryptocurrencies and digital tokens as a means to circumnavigate sanctions. More recently, a Russian collective of weapons manufacturers asked the governor of the country’s Central Bank to consider allowing international arms sales in bitcoin or a “minerals-backed stablecoin.”