According to a new report from the International Monetary Fund, sanctioned countries such as Russia may be able to mine cryptocurrency in order to escape economic sanctions.
According to the IMF, Russia can use a range of tools to move money out of its traditional financial system. These tools include unregulated exchanges and platforms that enhance anonymity, such as DEXs and mixers.
Additionally, the IMF also highlighted the use of digital currencies, such as monero. These currencies are designed to protect personal information and provide enhanced anonymity for transactions by rendering them impossible to track. This makes it easier for the Russian government to mitigate the effects of an embargo.
Mining would help Russia circumvent sanctions
Throughout history, Russia has been the most sanctioned country – even more so than North Korea. The world has taken over 400 different measures against them, and the International Monetary Fund says that in such a scenario, the government could turn to cryptocurrency mining in order to “monetize energy resources that cannot be exported.”
IMF and other law enforcement agencies have long been interested in cryptocurrency mining. This is because such an activity can prove profitable during times when other economic activities are prohibited or restricted. North Korea and Iran are examples of sanctioned countries mining cryptocurrencies. Venezuela has a sizable digital asset community.
Additionally, sanctioned countries may allocate more resources to mining in order to avoid sanctions. Mining energy-intensive blockchains like Bitcoin could allow countries to monetize their energy resources. Some of these resources cannot be exported due to sanctions.
Despite being relatively small at the moment, the IMF notes that such activity will always have the potential to grow rapidly, and this cannot be controlled.
Considering the overall volume of mining revenues and the share of mines in sanctioned countries, it appears that the scale of such flows is relatively limited at this time. However, financial integrity is still at risk.