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The International Monetary Fund has said Russia could evade economic sanctions levied in the wake of its invasion of Ukraine by pivoting to cryptocurrency mining.
The report specifically warns that Russia could martial its vast energy resources to power crypto mining and generate revenue.
“Over time, sanctioned countries could also allocate more resources toward evading sanctions through mining. Mining for energy-intensive blockchains like Bitcoin can allow countries to monetize energy resources, some of which cannot be exported due to sanctions,” the IMF said.
The international organization did add a caveat to this warning, saying the share of mining in countries under sanctions—as well as the overall size of mining revenue globally—“suggests that the magnitude of such flows is relatively contained, although risks to financial integrity remain.”
President Vladimir Putin previously has said Russia has a “competitive advantage” when it comes to Bitcoin mining. According to Cambridge University, Russia is one of the leading jurisdictions in the world when it comes to Bitcoin mining, ranking third in a study published last year.
After the Ukraine invasion, concerns were raised over the potential for Russia to dodge sanctions via crypto.
It's important to note that while it's unlikely cryptocurrencies could enable Russia—as a nation state—to entirely blunt the force of international sanctions, specific sanctioned entities could pivot to crypto to provide revenue.
Other than mining, other methods could—and have—been used in the past. One such example is ransomware, an industry which lined the pockets of Russian-affiliated actors more so than any other group last year.
Crane Hassold, a former FBI agent and current director of threat intelligence at cloud security firm Abnormal Security, previously told Decrypt that cryptocurrencies were the “primary factor” driving today’s ransomware industry.
Another method is the simple use of crypto exchanges that do not comply with sanctions. Last September, crypto exchange SUEX was sanctioned by the U.S. Treasury’s Office of Foreign Assets Control as an entity responsible for—or an entity complicit in—cyber-related activity against American interests.