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Bitcoin is up by about 15% from $38,000 to now $44,500 as Russia sanctions its own citizens in response to EU, US and UK sanctioning Russia.
Russia’s invading president Vladimir Putin banned companies and individuals from sending cash to a foreign account.
Russia’s Prime Minister also said Putin is preparing a decree aimed at preventing foreign investment exiting the country.
The legality of that move, and whether it would be targeted or indiscriminate, is unclear. Just as is its enforcement with it possible we see a situation where you can’t sell your Russian stocks once they open for trading next week.
“Non-residents of Russia are blocked from selling securities on MOEX per Central Bank of Russia regulation,” IBKR, one of the biggest stock broker, said.
That in effect sounds like a confiscation of wealth belonging to ordinary European and American citizens who might be stuck watching Russians crash prices and make any Russian stock they have be worthless.
In contrast, Europe and USA has so far taken a very targeted approach, sanctioning individuals in charge, including Vladimir Putin, rather than effectively confiscating the EU or US investments of any and all Russians.
Yet Russia may do precisely that to the Russians themself, especially if the financial crisis deepens to the point Putin moves to confiscate deposits in Russian banks.
Bitcoin thus has clearly seen increased demand because it would be the most liquid and convenient way to bypass restrictions on transfers abroad.
Wealthy Russians especially, including middle to upper middle class individuals, may well find it necessary to turn some of their savings into crypto and transfer it abroad where it can’t be seized.
The price of bitcoin thus in Russian peer to peer exchanges has apparently developed a premium of $20,000.
But some suggest that rather than a premium, this is more because the official usd/rub rate is not accessible to the Russian public.
On the official exchange rate you need 105 ruble for one dollar, but as a member of the public if you want to carry out an exchange, you need to pay up 250 rubles for a dollar.
That may be one shop, so if we go by bitcoin’s peer to peer price in Russia, the real exchange rate is about 180 rub to the dollar.
As far as the Russian people are concerned, a lot of this is obviously a bit academic in regards to whether it’s a premium or a decoupling between the official ruble exchange rate and that accessible to the public.
That’s because, presuming their savings were in rub, the end result is the same where they can now buy a lot less bitcoin than they could a few days ago.
That goes for everything else as well, whether electronics from China or medicine from abroud.
They will now also get less in concrete terms for whatever goods they are selling as although the price of oil and gas has risen, the value of the ruble has fallen and thus in real terms they may be getting less for their gas than previously.
A global asset like bitcoin escapes those local factors, and since they’re getting worse and worse in Russia, presumably everyone else across the world is trying to frontrun them.
Because actual new demand, and in this case pretty much out of necessity, might be just 10% of the price equation as speculation tries to price in that demand.
The Blockchain Pipeline
As Russia sanctions Russians for Russia being sanctioned, whether Russian citizens would be bypassing western sanctions or their own country’s sanctions and who would benefit more, the west or Putin, is clearly a complicated matter.
But not technically where the actual pipeline is concerned with an easy set-up here being a RUB token that then can have an actual market based exchange against USDt and of course can be transferred into bitcoin or other cryptos or can be defi-ed.
If Putin was willing to tolerate this, then there isn’t much anyone else can do to stop it because as a token it wouldn’t need centralized exchanges.
Thus, in an organized fashion, you could easily have a leap and your own clearing house by tokenizing your fiat through private actors that effectively act as an agent of the central bank.
However, their central bank wants to stop people selling RUB, not to facilitate it. So if the national fiat government of the fiat you want to tokenize is against you, things get a bit more complicated.
That’s because fiat runs through banks and banks can of course kick you off. So in that situation you’d need to engage in a very complicated game of being under the radar that may require you to change the bank account now and then as banks bar you.
That’s of course if you want the actual RUB issued by the central bank to be the one reflected on your token. To do the tokenization in a synthetic way instead where you just track the price, you just fork Dai and change what the Oracle points to, but where the Russian public is concerned they’d still have the problem of first getting into the crypto network.
You can always mine bitcoin, or any of the other Proof of Work cryptos, including ethereum currently. That’s also a fairly direct way of entering the crypto network through fiat, but it takes quite a bit of time and effort.
Buying it peer to peer would be a lot easier, and that’s clearly what many in Russia and presumably also in Ukraine are doing to protect their savings in the best way possible in this 21st century.
