Posted 12 months ago | by Ben Armstrong
Will Belarus Use Cryptos to Sidestep Sanctions?
As a result of a botched election, it looks like Belarus is becoming the next geopolitical hotspot. The current President isn't stepping down – which means sanctions from the EU and possibly the USA are on the way.
Belarus has close connections to Russia, and if we continue to see a push to destabilize the existing government, there may be a Russian intervention in the ex-USSR satellite state. Until the issues come to a head – Belarus may need to find a way to evade western sanctions.
Cryptos have already been brought up in Russian media as a possible way to access global capital markets, although it may be difficult for Belarus to do anything with the fiat currency it gains from crypto transactions if Western banks won't deal with the sanctioned government.
Do Cryptos Work to Bust Sanctions?
To be sure, cryptos could be used by a person to get around the established financial system. The use case for a sanctioned government is a little different, given the fact that a government's transactions are a whole lot easier to track than a person's crypto banking.
These factors are only really relevant for a country that needs access to fiat currency as most crypto networks would clear transactions for any party – and this is where things get more complex.
One of the biggest reasons why cryptos can be used to bust sanctions is that bilateral trade isn't settled in cryptocurrency. If two nations decided to use Bitcoin as a means of settlement, then there would be no effective way to sanction a nation.
The Future is Uncertain
The architecture behind decentralized blockchains is a good way to eliminate the power that government issued fiat currency has in the global economy. Of course, for this to work, more nations would have to use cryptos as a means of settlement.
For the moment, this isn't happening – at least at a macro level. Like most innovations, the private sector tends to embrace new technological advances first, and governments are left to figure out how to adapt to the changes later on.
One thing to pay attention to is the case of Venezuela's Petro, which is the world's first CBDC. It has been a total failure, which may be something of a warning to other nations who are working to translate their worthless fiat to the age of blockchain.
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