The European Commission today issued a joint statement on further restrictive economic measures on Russia. Russia began a full-scale invasion of Ukraine in the early morning hours on Thursday. Since then, Russian troops have entered Kyiv and other Ukrainian cities, putting its democratically elected government at risk.
The European Commission said: “As Russian forces unleash their assault on Kyiv and other Ukrainian cities, we are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies.” The United States and European nations are planning to implement these measures within the coming days.
The Economic Sanction On Russia To Isolate From International Financial System
In particular, the western alliance has committed to undertake the following measures:
First, The US and EU nations will ensure that Russian banks are removed from the SWIFT messaging system, disconnecting them from the international financial system and restrict their ability to operate globally.
Second, the west lobby will take restrictive measures to prevent the Russian Central Bank from deploying its international reserves in ways that undermine the impact of these sanctions.
Third, the US allies will also act against the people and entities who facilitate the war in Ukraine and the harmful activities of the Russian government. Specifically, they will limit the sale of citizenship—so called golden passports—that let wealthy Russians connected to the Russian government become citizens of United States and European countries and gain access to their financial systems.
Fourth, A transatlantic task force will be activated that will ensure the effective implementation of the economic sanctions on Russia by identifying and freezing the assets of sanctioned individuals and companies within jurisdictions of the US and EU countries.
“As a part of this effort we are committed to employing sanctions and other financial and enforcement measures on additional Russian officials and elites close to the Russian government, as well as their families, and their enablers to identify and freeze the assets they hold in our jurisdictions. We will also engage other governments and work to detect and disrupt the movement of ill-gotten gains, and to deny these individuals the ability to hide their assets in jurisdictions across the world,” the European commision said in the joint statement.
Why does it matter? Freezing the assets of the Russian central bank is a more powerful step that might result in a bank run and a collapse in the Russian currency ruble’s exchange rate. It would also certainly stifle Russia’s capacity to fund military operations.
Russia is most likely to turn to cryptocurrency to overcome the challenges posed by these economic sanctions. But, crypto ecosystem is still in its infancy and would not be sufficient to evade the sanctions completely.
Cryptocurrency Playing Crucial Role In Russia and Ukraine
Both Russia and Ukraine, however, becoming heavily dependent on Cryptocurrency to cope up with their distinct financial problems. Russia is reportedly using cryptocurrency to bypass the impact of sanctions while Ukraine is onboarding cryptocurrency system to supplement its closed banking activities due to ongoing war and curfew.
Moreover, the Ukraine government is now also accepting donations in cryptocurrency. Ukraine’s military had earlier announced it could not accept crypto for legal reasons. But, it changed its stance just days after Russia invaded Ukraine. On Saturday, the country’s official Twitter account tweeted out a call for donations through Bitcoin, Ethereum, and the stablecoin tether.
The vice prime minister of Ukraine, Mykhailo Fedorov, confirmed on his Twitter account that the call for donations was real, and asked people to “Stand with Ukraine.” As of publication, these wallets have received over $4 million in cryptocurrency.
Before the call for donation by Ukraine government, people from across the world donated in Bitcoin and other cryptocurrencies to Come Back Alive, a nonprofit that supports the Ukrainian military. Ukraine’s crypto wallet address is distinct from Come Back Alive’s address.
As of Saturday morning, Ukraine has received about 9.9 bitcoin (roughly $390,000) and about 117 ether (about $320,000) as well as a small amount of other crypto coins.
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