In the light of the ongoing war situation between Ukraine and Russia, the United States has enforced new sanctions on Russia, temporarily stopping any foreign aid to the country. The country reportedly receives millions in foreign aid every year from foreign countries, including the U.S. With the immediate stoppage of this foreign aid, the Russian government and leaders will be forced to look elsewhere for financial and moral support. And, it is being said that the Russian leaders can use digital currencies to deal with at least some of the negative effects that the present situation will likely have on their country’s economy.
Why it matters
For one, these countries will stop their banks from trading with Russian businesses and the government. At the same time, Russian banks will be banned from trading with foreign entities. This might greatly affect the country’s ability to maintain liquidity and provide funds and transfer money as and when needed. And as it happens, because the country is in a war situation, the support of banks is crucial at this time.
And because the U.S. dollar is a global currency used for international payments between countries worldwide. If the supply is stopped to Russia, it might just get cut from the rest of the world, which will not be a very favourable situation for the country, especially under the present circumstances.
However, few people know that digital currencies can actually help Russia get out of this situation, as cryptocurrencies allow the transfer of money without banks.
How can Russia benefit from cryptocurrencies at this time?
One thing that the U.S. sanction imposed on Russia means is that leading banks around the world will be instructed to block any transactions, including payments, with the particular country. This will effectively put the country in a difficult situation given that its supply to payments through banks will be completely prohibited. Cryptocurrency can be the answer.
As we very well know, cryptocurrencies are unregulated digital currencies that cannot be controlled by any single entity, bank or government. This is why it cannot be banned or stopped even by the world’s most powerful leaders.
Though all cryptocurrency transactions are recorded on the blockchain and can be traced if needed, this cannot stop a country from using these digital currencies for its personal benefit, because there is no way the U.S. or any other country can put sanctions on the use of cryptocurrencies.
Even in the e-commerce space, there are cryptocurrencies such as the Libra Coin that are making it possible for businesses in all corners of the world to trade beyond borders using the most secure and low-cost payment gateway of Libra.