On February 26 local time, the United States, the European Union, the United Kingdom and Canada issued a joint statement announcing that several major banks in Russia were prohibited from using swift international settlement system. According to the analysis, the western countries' kicking Russia out of the swift system is one of the most severe financial measures against Russia, which will cause a major blow to Russia's foreign trade and international settlement. ▲ the IMF once pointed out in a report that the rapid development of bitcoin and cryptocurrency may affect the international financial system At the same time, foreign media reported that the rapid development of bitcoin and other cryptocurrencies in recent years may provide Russia with a means to evade sanctions. "Like the traditional financial system, Russia can use cryptocurrency to evade and respond to the sanctions," said Caroline Malcolm, international policy director of blockchain analysis company chainalysis In fact, Russia may have been prepared for this day. The question is, will cryptocurrency become Russia's "savior" to evade sanctions? Russia is the third largest bitcoin mining center in the world Cryptocurrency with 12% of the global cryptocurrency Market In October 2021, the US government warned that digital assets such as cryptocurrency could widely undermine the effectiveness of US sanctions. "These technologies provide opportunities to hold and transfer funds outside the financial system," the Treasury said in a report. "They also enable our competitors to build new financial and payment systems to weaken the global role of the dollar." Foreign media analysis pointed out that the sanctions measures of the United States and the European Union rely heavily on banks to implement. If the sanctioned enterprises or individuals conduct transactions denominated in traditional currencies such as US dollars or euros, the banks have the responsibility to mark and prevent these transactions. However, the explosive growth of digital currencies has enabled sanctioned entities to bypass the global banking system and complete transactions without the sight of banking regulators. ▲ machine room equipment of bitriver, a cryptocurrency mining company in Bratsk, Russia "If the Russians decide not to use any currency other than cryptocurrency, they can effectively avoid almost all sanctions. I'm sure they're already doing so." Anti money laundering compliance expert Ross s. delston said. Foreign media analysts believe that Russia can use a variety of cryptocurrency related tools to evade sanctions, but the key is to find a way not to trade in dollars. In addition, the transparency of cryptocurrency is based on the blockchain, and Russia can develop new tools to help hide transaction records. According to the data of Cambridge alternative financial center, Russia is the third largest bitcoin mining center after the United States and Kazakhstan. According to the report of the government analysis center quoted by the local Russian media the bell, Russia accounts for about 12% of the global encryption market. Last year, the average market value of the global cryptocurrency market was $1.87 trillion, and Russia's share was about $214 billion. Chainalysis's research shows that some Eastern European countries that have been frequently sanctioned in recent years are one of the regions with the highest "cryptocurrency transaction volume related to criminal activities". Among them, the "dark net" used for illegal transactions entered a record $1.7 billion cryptocurrency in 2020, mostly bitcoin. The study also pointed out that the growth of the "dark network" market in Eastern Europe is almost due to Hydra, a Russian dark network platform. In February this year, chainalysis pointed out in a report that hydra is "by far the world's largest dark network market, and its revenue accounted for more than 75% of the global dark network market revenue in 2020". In fact, Russia may have been preparing for this day. ▲ bitriver data center, which provides cryptocurrency mining services in Bratsk, Russia Mike Parker, a former federal prosecutor and lawyer in charge of anti money laundering and sanctions at Ferrari law firm in Washington, said it would be naive for the outside world to think that Russia did not anticipate this situation. "Russia has a lot of time to consider this specific consequence". After the Crimea incident in 2014, seven large banks in Russia were eliminated by swift system, resulting in varying degrees of impact on the Russian financial industry and stagnation of a large number of commercial activities. Since then, Russia has been promoting the process of "de dollarization". In 2015, the Russian International Payment System issued the first batch of bank cards "milk cards" that meet the standards of Russia's domestic payment system. Subsequently, Russia quickly established its own payment system and financial information exchange system, which fundamentally laid the foundation of Russia's de dollarization financial infrastructure. ▲ Central Bank of Russia In October 2020, the Central Bank of Russia put forward the concept of "digital ruble" in a report, saying that it will reduce its dependence on the United States, better avoid sanctions and allow Russian entities to trade with any country or other counterparty willing to trade this digital currency outside the international banking system. On the occasion of the "white heat" of the Russian Ukrainian crisis, on February 15, the Russian Central Bank announced that it began to test the digital ruble platform, which is its planned central bank digital currency (CBDC). In addition, according to CCTV news, after months of quarreling over whether Russia will completely ban the use, exchange and circulation of digital currency, an insider of the Russian government revealed on February 8 local time that the Russian government has approved the legislative concept of digital currency circulation supervision. Relevant departments of the Russian government will strictly supervise the circulation of encrypted digital currency in the country's market and further protect the rights of ordinary investors. Foreign media analysts believe that Russia can use a variety of cryptocurrency related tools to evade sanctions, but the key is to find a way not to trade in dollars. In addition, the transparency of cryptocurrency is based on the blockchain, and Russia can develop new tools to help hide transaction records. Can cryptocurrency become Russia's "savior"? However, although it has already begun to "plan ahead", it is still doubtful whether cryptocurrency can become Russia's "savior". Foreign media analysis on the 26th pointed out that cryptocurrencies such as bitcoin can indeed help funds bypass the banking system and transfer more easily around the world, but this does not mean that it can help Russia avoid international sanctions. Because it is unrealistic to transfer funds across borders using cryptocurrencies on a large scale. Although the transfer and transaction speed of cryptocurrency is very fast, each transaction record is stored on the blockchain, which can be read by anyone and can not be forged or destroyed by anyone. "The problem is that the transfer of cryptocurrency can be tracked in real time. In the past few years, some technological breakthroughs have been made in tracking encryption activities, whether it is simple trading activities or mechanisms designed to cover up the source of funds." Salman banae, director of public policy in North America at chainalysis, explained. Malcolm also said that cryptocurrency did not provide Russia with a "panacea" to escape sanctions, because, like the traditional financial system, the cryptocurrency ecosystem can also take corresponding measures to identify transactions from "sanctioned entities". Zachary Goldman, a partner at waikaiping and Erde law firm in Washington, believes that cryptocurrency provides investigators with "unprecedented transparency", which is easier in some ways than investigations involving cash or other physical objects. In September 2021, the US Treasury Department added a digital currency exchange to the sanctions list for the first time. The exchange, called suex OTC, is registered in the Czech Republic but has close ties with Russia, U.S. officials said. In November 2021, chatex, the second digital currency exchange, was added to the sanctions list of the US Treasury Department. Injure the enemy by 1000 and lose 800 by yourself The "killer mace" of the United States may stimulate the global economy to accelerate de dollarization Although some professionals call kicking out swift sanctions as "financial nuclear weapons", some policy experts say this description has been "seriously exaggerated". They believe that kicking Russian banks out of the swift system will not be as effective as directly sanctioning Russian banks. ▲ swift international settlement system They pointed out that one of the reasons why the United States and the European Union had been reluctant to offer this "killer mace" to Russia was that once the Russian banks were kicked out, it might trigger an economic shock that American politicians and enterprises were unwilling to provoke. There is also a more complex and important factor, anxiety about the status of the US dollar as a global reserve currency. Analysts pointed out that in the long run, such sanctions may guide emerging markets to a blockchain based system, thereby reducing global dependence on the US centered international monetary system. In short, the sanctions against swift system are likely to stimulate the acceleration of "de dollarization" of the world economy. ▲ analysts pointed out that in the long run, the US sanctions against Russia may reduce the global dependence on the US centered international monetary system Today, 11000 financial institutions in more than 200 countries around the world use swift for payment and securities transfer. The system is headquartered in Belgium, which conveys the purpose of swift "neutrality that needs to be strictly maintained" to a certain extent. But in fact, most of Swift's transactions are settled in US dollars, which helps to consolidate the status of the US dollar as the global reserve currency. At the same time, it gives the United States a great influence on the global economy, enables the US government to borrow at a discount interest rate, makes the United States have a huge debt of more than US $30 trillion, and exerts influence on foreign countries through punitive monetary policy. Previously, the United States used its influence to kick Iran out of swift twice. In the end, both sanctions met the "expectation", that is, to weaken the Iranian economy by restricting international trade. But at the same time, even the allies of the United States began to want to "alienate" swift. They knew how much their banks depended on swift and wanted to turn to less dollar centered alternatives. For example, in 2018, when explaining why Europe needed its own version of swift, then German Foreign Minister Heiko MAS said, "we must improve Europe's autonomy and sovereignty in trade, economic and financial policies". The report points out that through the construction in recent years, there are many systems that can replace swift in the world. The EU and Russia have established their own systems, as well as emerging alternatives based on blockchain such as ripple. However, as we all know, the most difficult thing is not to establish a new system, but how to let member banks join and accept the use of the new system. Therefore, foreign media reports and analysis believe that the United States' practice of kicking Russia out of swift may trigger a chain reaction and make some countries really start to adopt alternative systems. (Xinhua News Agency)