Countries like Russia and Iran could use cryptocurrency mining to cash out energy resources and circumvent sanctions, the International Monetary Fund predicts in a report. The effects of the war in Ukraine continue to reverberate globally, and encryption is one of them, the IMF said.
Wars, sanctions lead to wider spread of crypto assets, reports show
The consequences of an ongoing military conflict in Ukraine will test the resilience of the global financial system, Impact The IMF warned in its April 2022 Global Financial Stability Report, which will lead to the role of the US dollar and the establishment of a central bank’s block of digital currencies. According to the document, energy security priorities can jeopardize climate change targets.
Accelerated “cryptocurrency” due to the widespread use of crypto assets in emerging markets is another issue that policy makers will have to deal with in the coming years. As evidence of this trend, the IMF points out that crypto trading volumes have skyrocketed since the introduction of sanctions (including fines) against Russia over invasion of Ukraine.The Report Emphasis:
This is happening in response to such a long-term increase in cross-border transactions, pushing the challenge of applying capital flow measures and sanctions to the fore.
The IMF points out that the capital restrictions imposed on both countries also contributed to the increase. At the same time, “the liquidity of the ruble-hryvnia trading pair on a centralized exchange is still limited, and in the case of the ruble it has declined even more recently,” the authors said. In their opinion, this makes large-scale transfers over cryptographic exchanges unrealistic.
However, the IMF recognizes that the crypto ecosystem allows users to circumvent restrictive measures such as stricter identity verification requirements. International organizations acknowledge that some of the transactions may have shifted to less transparent platforms or non-compliant crypto service providers as a result of the crypto asset freeze and the block of new ruble deposits.
The IMF recognizes the risks to financial integrity in cryptocurrency mining
IMF experts believe that countries like the Russian Federation and the Islamic Republic of Iran can use cryptocurrency mining to circumvent sanctions. They elaborate that the energy-intensive casting of digital currencies like Bitcoin will allow these countries to monetize their energy resources outside the traditional financial system. Revenue can also be generated via transaction fees.
“At this point, the proportion of mining in sanctioned countries and the overall size of mining revenues suggest that the scale of such flows is relatively restrained, although there are still risks to fiscal health. IMF concludes. According to the estimates quoted in the report, Russian miners could have earned nearly 11% of Bitcoin mining revenue last year. That’s an average of about $ 1.4 billion a month, and Iran’s mining farms could have received about 3%.
Moscow officials are paying attention Cryptocurrency As a tool to restore Russia’s access to the world market, Receive payment Energy exports, finance International tradeAnd potentially diversify Foreign currency reserves..Government agency Support legalization Cryptocurrency mining as an economic activity New bill “About digital currencies” recently revision Add regulations that regulate the industry.
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