Despite the strengthening of sanctions, Russian investors appear to be continuing to transact in Bitcoin and other cryptocurrencies.
While overall flows appear to be tiny, data from blockchain analytics firm Kaiko shows that the volume of ruble-denominated Bitcoin trade increased to its highest level this year on Saturday.
Meanwhile, the Tether stablecoin, which purports to be backed one-to-one with fiat, appears to be handling the majority of the ruble-denominated crypto trade volume.
According to Kaiko, Bitcoin trading pairs denominated in rubles grew by “magnitude” on March 5. On February 24, when Russia invaded Ukraine, the average trade size of Bitcoin ruble transactions on Binance reached a 10-month high of around $580.
“Perhaps more Russian retail investors are trying to get out of fiat entirely in favor of BTC,” Andrew Tu, business development manager at crypto algorithmic trading firm Efficient Frontier, speculated.
“While US dollar restrictions are unlikely to be applied genuinely to USDT holders, I suppose some people are simply taking extra precautions.”
Russia’s Bitcoin trading accounts for a small percentage of the overall volume of Bitcoins traded worldwide. The daily trading volume of Bitcoin ranges between $20 billion to $40 billion. According to Kaiko, the entire trading volume of BTC/RUB on March 5 was over $14.2 million.
According to Kaiko’s March 7 newsletter, just three worldwide crypto exchanges, Binance, Yobit, and LocalBitcoins, allow ruble-denominated crypto trading pairs.
While several exchanges, including as Binance and Coinbase, have stated that ordinary Russians will not be barred from using their services, there has been an increasing push to prohibit users associated with sanctioned individuals and businesses. For example, Coinbase reported blocking over 25,000 addresses linked to the sanction list.
Caroline Bowler, CEO of BTC Markets in Australia, claimed her organization is barring Russian entities that are subject to sanctions. At the same time, there has been an upsurge in trading by those linked to Russia.
In a Bloomberg Television interview, she remarked, “This increase in Bitcoin in especially relates to retail, who are out there aggressively buying in tiny sums.”
The moves to block crypto as a sanction workaround come after the US and its allies imposed extensive sanctions on Russia, including a measure to restrict some banks from using the SWIFT messaging system, which connects financial institutions all over the world. The steps also highlight the critical role that digital assets are playing in a conflict that is putting the world’s security at risk.
On March 4, Paolo Ardoino, the chief technology officer of USDT issuer Tether, claimed on Twitter that USDT “needs to comply with standards of central authority” as a centralized stablecoin.