Russian Crypto Volumes Fall, Debunking Theories of Evading Sanctions

Key Insights

• Russian ruble-denominated crypto buying, selling, and trading on major exchanges have fallen.
• This debunks theories circulating for a while about mass crypto buying in Russia to evade sanctions.
• Several rounds of sanctions have been imposed by the US, EU, Canada, and other nations on key Russian Banks and some ministers.

Russian denominated crypto purchasing has gone down despite the bright larger market as most crypto assets recovered from their lower support levels.

According to blockchain-analysis firms, crypto transactions in Russian rubles have been decelerating on significant exchanges. However, the same debunks theories that the country could pivot to digital assets to avoid sanctions.

Crypto Not the Way out For Russia

Over the last week, Bitcoin gained over 20% as analysts and market experts attributed the sudden uptick to Russians buying cryptos amid increasing economic sanctions. However, the narrative that Russians are evading economic sanctions via crypto looked slightly off the mark.

Data from Chainalysis presented that ruble-denominated crypto trading volume was just $34.1 million on March 3. On February 24, trade volumes were around $70 million. The same meant that ruble-denominated crypto trading plunged by almost 50% over a week.

As per news reports, Citigroup Inc also estimates that actual Bitcoin buying from Russia was just 210 BTC on average per day in the last week. Notably, the total daily volume generally ranges between $20 billion and $40 billion.

That said, while Russians may still be trading on a peer-to-peer basis, large volumes should still be visible on the blockchain.

This trend mentioned above suggests the Bitcoin rally over the past week to above $45,000 had very little to do with the nation’s buying power in practice.

So, it seems like the recent uptick in Bitcoin’s price was primarily because traders expected a rise in Russia’s BTC buying power, not because the buying power saw a surge.

Increased Regulatory Scrutiny

The US has imposed several rounds of sanctions in response to Moscow’s unprovoked attack on Ukraine, including sanctions against Russian banks, its central bank, sovereign debt, and Foreign Minister Sergey Lavrov.

This weekend, the US, its European allies, and Canada agreed to cut off some Russian banks from the SWIFT interbank messaging system. SWIFT connects over 11,000 banks and financial institutions in nearly 200 countries and territories.

Furthermore, recently, the New York state increased its blockchain surveillance capacities to prevent cryptocurrencies from supporting Russian interests.