Asus urged to leave Russia as oligarchs turn to black market

By Raffaele Redi

Crypto may only account for a small portion of Russia’s overall sanctions evasion activity

Ukrainian and Russian flags                                 
The war in Ukraine is affecting the wider global economy as well as the crypto environment – Photo: Shutterstock
                                

Cryptos cannot rescue Russia from NATO sanctions, according to experts and the FBI. Oligarchs’ race to buy US dollar-backed stablecoins continues, however, through Russian ‘black’ or underground exchanges, whose turnover has increased by a factor of at least five.

On traditional platforms, the volume of roubles being exchanged for tether (USDT), the main stablecoin, has been decreasing in the last hours, despite a more favourable rate – the USD/RUB pair is trading around the 114 level on the forex markets. It remains, however, well above the normal level.

However, as the rouble is depreciating to less than a US penny, it is only wealthy Russians that can afford to convert their currency to stablecoins. At the time of writing, for example, around 114 roubles are needed to buy just one USDT.

The FBI is watching

After Bank of Russia imposed a ban on foreign exchange transactions, in response to NATO sanctions, underground exchanges have reportedly been appearing in the country, offering the purchase and sale of dollars and euros through cryptocurrencies.

However, the scope for oligarchs to convert their fortunes into crypto seems limited. Migrating funds to the West will be not easy as most of the leading crypto players could close their doors to Russian actors after the European Community banned, substantially, every crypto transaction with Russian wallets.

Crypto may in fact only account for a small portion of Russia’s overall sanctions evasion activity, as NATO authorities are monitoring Russian wallets closely.

“Russians’ ability to circumvent the sanctions with cryptocurrency is probably highly overestimated on the part of maybe them and others,” said Christopher A Wray, director of the Federal Bureau of Investigation (FBI), during a recent hearing.

“We are, as a community and with our partners overseas, far more effective on that than I think that sometimes they appreciate, and there's a lot of expertise in terms of tools and strategies to help block that kind of effort. Ultimately, what they really need to do is get access to some form of fiat currency, which becomes more challenging,” he said.

Ukraine urges Asus to stop serving Russia

On the other side of the front, Ukrainian vice-prime minister Mikhailo Fedorov has asked Taiwanese electronics giant Asus – one of the main providers of crypto mining hardware – to halt its business operations in the Russian Federation.

"Ukraine is now on the frontline of the defence of the principle of democracy and freedom in face of the war waged by the Russian Federation. […] We call on your company to end any relationship and stop doing business in Russia,” said Fedorov in a letter to Asus.

A decision from the Taiwanese company in this direction could force Russian miners – who largely rely on Asus microchips and hardware – to at least reduce their activities. Russia is currently the third-largest miner globally, accounting for around 11% of the global hasrate.

Asus did not immediately respond to a request for comment.

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