Russian denominated crypto trading volume has significantly fallen since the imposition of sanctions. This fact tends to debunk the theories of certain 'experts' that cryptocurrency would be the go-to vehicle for Russians to circumvent said sanctions.
Certain experts attributed last weeks Bitcoin 15% surge to Russian buying. However, this too was misplaced as on March 3, 2022, ruble denominated trading volume was only $34.1 million, approximately one-half the volume tracked on February 24, 2022 ($70.7 million). This data was accumulated by Chainalysis, a blockchain data platform.
According to Citi analysts including Alexander Saunders, in a statement released to Bloomberg:
Russian volumes have been relatively small so far, suggesting that the price action is more due to investors positioning for an expected uptick in demand from Russia, rather than Russian demand itself.
[Shen, M. Russia’s Crypto Volumes Are Stalling Across the Major Exchanges. (Accessed March 4, 2022)].
Nonetheless and despite experts dispelling the notion Russians can use crypto to evade the sanctions, regulators in both the United States and the European Union have ramped up their regulatory investigations of crypto.
Within the past several days, New York State has stepped up its blockchain surveillance capacity to expand restrictions on crypto being used in furtherance of any Russian interests [see, e.g. Andersen, D. New York state ramps up blockchain monitoring to enforce sanctions. (Accessed March 4, 2022)]. In fact, on February 27, 2022, current New York Governor, Kathy Hochul, issued an Executive Order directing the State's agencies to divest all Russian companies and institutions held, including any entity providing Russia with support [Hochul, K. Executive Order No. 14. (Accessed March 4, 2022)].
On the other side of the coin however, Jake Chervinsky, head of policy at the Blockchain Association took to Twitter and basically called these concerns 'unfounded':
In much the same vein, Ari Redbord, head of legal and government affairs at crypto crime investigator TRM Labs, told Aljazeera:
Unlike North Korea, Venezuela and Iran, Russia has been deeply ingrained in the global financial system for decades....Eighty percent of its daily foreign exchange transactions and half of its international trade are conducted in dollars. 'It is very difficult to move large amounts of crypto and convert it to usable currency....Russia cannot use crypto to replace the hundreds of billions of dollars that could be potentially blocked or frozen.
[Suleymanova, R. Crypto will not save Russia from sanctions, experts say. (Accessed March 4, 2022)].
As a result of the international communities foreboding potential regulatory actions, many large Exchanges have blacklisted individuals and institutions flagged for sanctions. A major exception here is Binance that has refused to restrict the trading accounts of what it calls innocent Russian customers.