Russia Could Take to Bitcoin Mining to Evade Sanctions, Warns IMF in New Global Financial Stability Report

There have been repeated concerns from executives of several nations that Russia could use crypto to dodge economic sanctions.

By Shomik Sen Bhattacharjee | Updated: 20 April 2022 12:49 IST

Russia Could Take to Bitcoin Mining to Evade Sanctions, Warns IMF in New Global Financial Stability Report

Photo Credit: Unsplash/ Executium

Russia could use cryptocurrency mining to evade sanctions, according to the IMF

Highlights

The IMF has published a 'Global Financial Stability' report
Russian miners claimed 11 percent of BTC mining revenue in 2021
The IMF has suggested countries to adhere by FATF standards

The International Monetary Fund (IMF) is encouraging global policymakers to develop standards for crypto in response to growing concerns highlighted by the war in Ukraine. In its Global Financial Stability Report published on April 19, the IMF directly addressed crypto's potential use in sanctions evasion by Russia and its potential to threaten the stability of existing financial systems through the changing banking landscape. Sanctioned nations could monetise domestic energy supplies, which cannot be exported abroad, by mining crypto currencies such as Bitcoin, an IMF reveals in the report.

The global financial system has seen increasing "cryptoization" amid the war in Ukraine and the COVID-19 pandemic, according to the IMF. Though much of this is due to general trading activity, the IMF warned that it could be used as a means of circumventing identification checks in capital flows, essentially, a means of anonymously transacting overseas. While the magnitude of capital flows to sanctioned actors is “relatively contained,” the IMF said that it still presents “risks to financial integrity.”

“Regulators in the US and UK, among others, have urged firms in their jurisdictions, including the crypto asset sector, to increase vigilance with regard to potential Russian sanction evasion attempts,” the IMF wrote in the report.

Samsung Wins Patent for a Tri-Fold Smartphone With Specialised Barrier Layer for Improved Durability

“Over time, sanctioned countries could also allocate more resources toward evading sanctions through mining,” the report continued. “The monetisation happens directly on blockchains and outside the financial system where the sanctions are implemented. Miners can also generate revenues directly from users that pay transaction fees to miners.”

To mitigate these risks, the IMF recommended that nations focus on the implementation of the Financial Action Task Force (FATF) standards, which included a travel rule for crypto assets that require exchanges to transmit sender and recipient identification information, as well as implementing additional laws and regulations on foreign exchange and capital flow management to cover crypto.

The IMF estimates that of total Bitcoin mining revenues, which last year reached $1.4 billion (roughly Rs. 10,695 crore), Russian miners could have captured close to 11 percent while Iranian miners captured three percent.

Ethereum Foundation Reveals It's Holding $1.6 Billion in Assets

Should you buy a 4G or 5G budget phone? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.

Affiliate links may be automatically generated - see our ethics statement for details.

Cryptocurrency Prices across Indian exchanges

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.