In response to the ongoing crisis in Ukraine, the US is taking action against Russia through many means – including the digital asset industry. OFAC has targeted cryptocurrency mining company Bitriver AG, which is a company in Switzerland, but which also has three major offices in Russia. They have also sanctioned ten subsidiaries for either operating or having operated in the tech sector for the Russian Federation. This landmark movement signifies the first time that a Bitcoin operation has ever been sanctioned by the United States. Bitriver is apparently operating a network of server farms and they are selling virtual currencies internationally. Companies like this are helping Russia to monetize their resources.
Russia’s Advantage with Crypto
Russia does have an advantage when it comes to energy resources and the cold climate also facilitates the mining of Bitcoin. That being said, mining companies often rely heavily on imported equipment and of course, fiat payments. This makes them incredibly vulnerable to sanctions. The US has shown that they are entirely committed to making sure that no asset is able to become a mechanism for the Putin regime so that the country can offset some of their sanctions.
The sanctions came a day after the IMF warned that it would be possible for Russia to avoid the sanctions by simply mining crypto.
Other companies that have been impacted include Transkapitalbank. CBDCs are not seen as being cryptocurrency and they are in fact regulated by a central authority. The White House is looking into migrating the risk of crypto for general consumers to try and lead the sector in technological competitiveness. China has debuted their very own version of CBDC which is the digital yuan.
Spurring the Cryptocurrency Industry Forward
So, could this movement spur the digital cryptocurrency industry? According to research released by the Pew Research Centre, over 16% of people in the US have chosen to trade, use or invest cryptocurrency. This figure is likely to rocket even more. 2022 could well be a catalyst for cryptocurrency as governments are now having to force adoption. They are putting people in the position where they have to flee to other forms of currency, and this is going to mean major things for the industry. The main thing to remember is that the more people adopt cryptocurrency, the more powerful and valuable it becomes. Right now, the sector is thriving, but sanctions like this on Russia help to bring it into the forefront even more, which is certainly going to make a huge difference to the sector as we know it.
Bitcoin is Climbing as a Result of the Sanctions
Cryptocurrencies could come into their own as financial sanctions are currently stopping any transactions to and from Russia. Only time will tell where things are going to go from here, but so far, it looks like these moves are going to have a lasting effect on the cryptocurrency industry.