Two senior executives at San Francisco, California-based payments company Ripple are expressing pessimism over Russia’s ability to bypass sanctions using cryptocurrencies.
Ripple CEO Brad Garlinghouse says in a tweet that “there are factual reasons why crypto can’t be used on the broad scale for Russia to evade sanction.”
According to Garlinghouse, there are “extremely stringent” know-your-customer (KYC) and anti-money laundering (AML) policies put in place to ensure sanctioned organizations and individuals on the U.S. Office of Foreign Assets Control (OFAC) don’t circumvent the measures put in place.
OFAC is an agency of the U.S. Treasury Department charged with administering and enforcing economic and trade sanctions imposed by the United States.
“In order to convert crypto to fiat, exchanges, etc rely on banking partners who could lose their licenses if someone on the OFAC list is able to slip through. Extremely stringent KYC/AML policies are in place to avoid precisely this.”
Next up is Asheesh Birla, the general manager of RippleNet, Ripple’s blockchain-based solution for making cross-border transfers among banks and other financial institutions.
Birla says that besides the fact that crypto on-ramps and off-ramps such as centralized exchanges are obliged to abide by OFAC laws, liquidity would pose a challenge for Russia.
According to the RippleNet general manager, the liquidity in the crypto market would be insufficient for Russia’s foreign exchange (FX) needs if the Eurasian country chose to use digital assets such as Bitcoin (BTC) to bypass sanctions.
“As stated by the U.S. Treasury department – Russia conducts nearly $50 billion in FX transactions a day. As the largest crypto, Bitcoin’s volume is usually between about $20 to $50 billion a day. Russia’s needs would encompass Bitcoin and more!
As of January 2022, you could only send approximately $200,000 worth of Russian rubles at a time through Bitcoin on Binance [crypto exchange], versus $3.7 million through Bitcoin/US dollar and $2.9 million through Bitcoin/Euro on Bitstamp [crypto exchange].
Even if you were sending approximately $200,000 every minute and assuming the Bitcoin/Ruble market was resilient enough to immediately replenish the liquidity (very doubtful), you’re nowhere near $50 billion a day. Also, the total average daily volume over the last month for Bitcoin/Ruble has been just approximately $11 million…”
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