Investor understanding that sanctions against Russia may be more limited than initially assumed boosted Bitcoin, Ethereum, and Dogecoin towards the end of February. Furthermore, Russia's partial ban from the SWIFT payment network might also enhance crypto transaction volumes - until potential cryptocurrency sanctions are decided.
Regulators from the West are concerned that cryptocurrencies and other digital tokens could provide an alternative monetary system to help keep businesses afloat during the crisis. The United States, EU, and Japan are all exploring controls to guarantee that cryptocurrencies are not used to circumvent financial sanctions imposed on Russia due to its invasion of Ukraine. The Babel Finance crypto trading team is following the latest developments closely.
The specifics of these cryptocurrency controls remain unknown. The United States has warned cryptocurrency exchanges not to assist transactions for Russian billionaires and businesses on its sanctions list. The EU might issue an order to prohibit cryptocurrency exchanges and organizations from issuing crypto assets or offering associated services to Russian clients. Japan may also request that exchanges block any cash-outs by Russians.
For institutions to enforce these controls, they may soon begin tracking transactions on cryptocurrency exchanges and the registered bank accounts associated with these trades. Despite this, the Babel Finance crypto trading team notes that some of the large exchanges are located outside of the United States, EU, and Japan. With no real headquarters or set location, they might be able to avoid worldwide regulatory oversight.
Our experts at Babel Finance's Hong Kong and Singapore offices believe enforcement will be difficult. Outside of exchanges, direct transfers between bitcoin wallets are unregulated. Bitcoin's and other digital tokens' decentralized nature ensures anonymity and makes it technologically difficult to monitor all individual payments and follow every computer's transaction.
The Babel Finance cryptocurrency research team believes that the conflict in Ukraine has also prompted investors to be concerned about the security of traditional assets. Many individuals now realize that the decentralized nature of cryptocurrencies might help them better diversify their wealth risks. In turn, this is encouraging more people to invest in encrypted assets. Coinbase had the highest outflow of bitcoin in four years from March 7th to 11th, owing to institutional investors buying bitcoin in huge amounts and moving bitcoin to personal accounts.
Babel Finance and its experts will continue to monitor the crypto-asset market's trends and threats. The team will analyze the regulatory and supervisory implications of the global crypto-assets market to pivot market opportunities and threats.
Notes to editors and readers
The report is based on the author's own research, analysis, and judgment and does not constitute an investment recommendation. Babel Finance assumes no responsibility for any consequences that readers may have.
About Babel Finance
Babel Finance is a global leading crypto financial services provider, offering institutional and HNWI investors professional services covering crypto lending and crypto trading.
The company is backed by prominent investors, including Sequoia Capital China, Tiger Global Management, BAI Capital, Zoo Capital, Dragonfly Capital, and NGC Ventures.
With a business focus in Asia and a business headquarters in Singapore, Babel Finance has established close cooperative relationships with major global exchanges, custodians, investment funds, and mining institutions.