• Christine Lagarde (ECB head) stated that she is very worried about the situation and believes that cryptocurrencies could threaten the effectiveness of sanctions imposed on Russia by the West for its invasion of Ukraine.
• The White House announced that Joe Biden, President of the United States, and his European Allies would announce on Thursday a new set of sanctions against Russia.

Christine Lagarde (presidence of the European Central Bank) stated that Russia is using cryptocurrencies to avoid the West-imposed sanctions. This statement was made on Tuesday hours before US President Donald Trump announced additional sanctions against Russia and the European Union for invading countries.

Lagarde noted that certain Russians could be using digital assets in order to bypass sanctions against the invasion of Ukraine. They may convert rubles into stablecoins and cryptocurrencies, or stablecoins into digital assets.

According to Bloomberg, in her presentation at the Bank for International Settlements Innovation Summit she stated that the Bank for International Settlements Innovation Summit witnessed an unusually high volume of transactions using cryptocurrency involving rubles.

“When you look at the volume of rubles to stable, into cryptos it is the greatest level we’ve seen since 2021,” said the European official during the virtual conference.
Likewise, she highlighted that cryptos “are certainly being used as a way to try to circumvent the sanctions that have been decided by many countries around the world against Russia and a particular and specific number of players.”

Crypto is “a threat”

Lagarde didn’t mention the Russian government in her speech as someone who evades sanctions by using cryptocurrencies. It is Russian individuals and companies that are using digital currency for this purpose, she stated.

Lagarde believes that cryptocurrencies pose a threat to the ability of sanctions to be effective. However, she also takes the opportunity to promote digital euros, the central bank digital currency that (CBDC), the ECB will soon launch.

According to the ECB’s head, CBDCs are associated with security, safety, and security. They also benefit from the trust often associated with national financial institutions, like a central bank.
Additionally, she warned that crypto currencies cannot be considered a security loophole in the face of sanctions.

European governments have “taken steps to clearly signal to all those who are exchanging, transacting, offering services in relation to crypto assets that they are being accomplices in trying to circumvent sanctions that would otherwise be applicable,” she emphasized.

Flipside

• Russia was said to have used cryptocurrencies from the beginning to export its goods and to evade severe sanctions by the West.
• Binance and Coinbase, crypto exchanges like Coinbase (NASDAQ) stated that they do not plan to block Russian clients unless the US and European governments order them to.

NATO summit: Russia gets new sanctions

The White House also announced Tuesday that President Joe Biden will host an emergency NATO summit with his European partners in Brussels. Biden will be there as well, and will attend the European Council session.

A new round of sanctions will be revealed against Russia during the European heads of government meeting. Jake Sullivan, White House national security advisor, said the new sanctions were designed to block the Kremlin’s ability to circumvent current economic sanctions.

Bloomberg quoted the official as saying that this involves not only adding sanctions but also making sure there’s a coordinated effort to combat evasion.

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