- Jerome Powell has increased the calls for cryptocurrency regulations in the wake of Russia’s invasion of Ukraine.
- The Fed Chair noted that “congressional action” is needed to rein in the growing ecosystem.
- Ukrainian leadership has also made calls for crypto exchanges to block Russian accounts from their platforms.
The talk of Russia switching to cryptocurrencies to evade sanctions has reached a heightened crescendo. The Fed Chair told Congressmen that it was time to step in to prevent the use of cryptocurrency by sanctioned individuals.
Regulate Cryptocurrencies Now
Head of the Federal Reserve, Jerome Powell testified before the Financial Services Committee on the state of the economy and seized the moment to call for increased cryptocurrency regulation. He noted that the nascent ecosystem provided an avenue for Russia’s government to bypass the economic sanctions that western allies slammed on the country.
“The conflict underscored the need for Congressional action on digital finance including cryptocurrencies,” said Powell in a passionate speech. “We have this burgeoning industry which has many parts to it, and there isn’t in place the kind of regulatory framework that needs to be there.”
In response to Russia’s invasion, EU nations resolved to kick Russian banks out of the SWIFT network as part of financial sanctions. Experts believe that these sanctions could lead to the shrinking of the Russian economy by as much as 5% but on-chain data suggest that the pivot to cryptocurrencies was already in motion.
Transaction volumes between USDT and the Russian Ruble reached an all-time high in the last week. The 5% increase in the number of Bitcoin whales since the start of the conflict could be an indication that wealthy Russians are turning to the asset class to protect their wealth. However, others believe that the switch to cryptocurrencies is almost impossible because of the lack of liquidity that often characterizes the cryptocurrency markets.
The President of the European Central Bank also lent her voice to the cause of swiftly regulating cryptocurrencies in view of Russia’s aggression. A group of concerned US congressmen sent a letter to Treasury Secretary, Janet Yellen with the intent of discovering the steps taken by the body in response to the threat.
Top cryptocurrency exchanges have refused the call by the White House and the top brass of the Ukrainian government to outrightly ban Russian accounts. Kraken, Binance, and Coinbase noted that they will not “unilaterally” close down the accounts of millions of users. However, platforms like Dmarket have decided to freeze the accounts of users from the Russian Federation and Belarus.