Russia may be completely cut off from global trade via a SWIFT banking ban. Could Bitcoin be used to circumvent those sanctions?
Covered:
- What is SWIFT, and Why is it Critical?
- Is Bitcoin in the Cards to Replace it?
What is SWIFT, and Why is it Critical?
Assuming you haven’t missed the melee around the Russia and Ukraine saga, steps are being taken to sanction Russia to a degree not seen in history due to the ratcheting up of military action in the eastern European country.
The real ‘ace-in-the-hole’ for western countries is to impose a sanction that would bar Russia from participating in SWIFT (Society for Worldwide Interbank Financial Telecommunications.) What is SWIFT, and why is this a massive development?
“SWIFT is a vast messaging network used by banks and other financial institutions to quickly, accurately, and securely send and receive information, such as money transfer instructions.” Daleep Singh, a deputy national security adviser for the US, said this sanction “remains on the table.”
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One of the Russia sanctions UK and US are reportedly trying to arrange is Russian banks being cut off from SWIFT
— Kevin Beaumont (@GossiTheDog) February 22, 2022
If Russia is cut off from SWIFT, it basically loses access to cross-border transactions and settlements at both a banking and corporate level. It would put Russia in the same camp as North Korea and Iran, more or less.
SWIFT is set to be replaced by blockchain, as it is an old, archaic system. Still, 11,000 financial institutions in more than 200 countries process more than 10 billion financial transactions per year using the network.
It is overseen by the G10 central banks — Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Great Britain, the United States, Switzerland, and Sweden — as well as the European Central Bank.
Nikolai Zhuravlev, vice speaker of Russia’s upper house of parliament, said, “if Russia is disconnected from SWIFT, then we will not receive [foreign] currency, and buyers, European countries in the first place, will not receive our goods.”
This, in theory, could halt Russian shipments of Oil, Gas, and other commodities as they would be barred from the network. The Ruble, the currency of Russia, could plummet in the face of this sanction. So what will Russia do about it? Well, bitcoin could be in the cards.
Recommended: Russia To Recognize Crypto As Currency, Not Digital Assets
Is Bitcoin in the Cards to Replace it?
We have all seen the jockeying between Russia’s Central Bank and their Parliament regarding the regulation of crypto. Just yesterday, Russia’s Ministry of Finance introduced a bill to parliament pushing forward a plan to regulate cryptocurrencies.
The timing certainly seems conspicuous. In the bill, bitcoin mining will also be regulated. Russia’s Finance minister has come out with some bullish statements recently that profess the bitcoin network’s uncensorable nature.
Russia’s finance minister Anton Siluanov, says placing a ban on #bitcoin is “same as banning the internet, which is impossible”. pic.twitter.com/JT9KaSVvzE
— Crypto Relevant (@crypto_relevant) February 16, 2022
Putin has been lukewarm on crypto, but recent comments suggest he is warming to the concept of using bitcoin to circumvent the “economic weapon” the dollar has become, in his words. At the Russian Energy Week forum, he mentioned that cryptocurrency “could “someday” be used instead of the US dollar to trade with.”
It is just speculation at this point, but all signs are pointing to bitcoin adoption increasing via these dire, and in some ways tragic, geopolitical conditions. Nik Bhatia, the author of the famous Bitcoin book “Layered Money,” summed it up quite well.
#Bitcoin finding itself in the middle of major geopolitical events right now: Russia/SWIFT, Ukraine legalization, Canada truckers…sorry you thought it was for “muh speculation”
— Nik Bhatia (@timevalueofbtc) February 17, 2022
Will Putin announce Russia is accepting only bitcoin for oil and gas? Right now it seems like a fever dream of crypto holders, but just two years ago, bitcoin becoming adopted as a legal currency would’ve seemed just as far-fetched.
SWIFT is so critical that for Russia, Bitcoin may actually be the only way to survive. What’s more, Europe may have no other choice but to adopt bitcoin, too, if they want to keep the lights on.
Qatar Says It Can't Replace Russian Gas Supplies To Europe https://t.co/6mUMm0s0IZ
— zerohedge (@zerohedge) February 22, 2022
Recommended: US And Russia Are In A Race For Bitcoin Mining Supremacy
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Russia May Use Bitcoin to Circumvent Massive Banking Sanctions
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