Maybe the crypto markets have already figured out that in order for sanctions to work, crypto needs to be banned, and the Fed is most likely already working on figuring out the parameters of the ban.
I think there'll be a massive increase in energy prices due to the sanctions against Russia, which will make proof of work crypto unfeasible, so I don't think crypto will have a large enough marketcap to be a viable way for Russia to circumvent the economical sanctions
> I think there'll be a massive increase in energy prices [...] which will make proof of work crypto unfeasible
Proof-of-work cryptocurrencies automatically adjust to use as much energy as possible (the amount of energy which can be bought with the block reward and fees acts as a cap, and the incentives are to increase the amount of energy used until reaching that point). If energy prices increase, they will adjust by using less energy. This has no effect on the block sizes or block intervals, so the feasibility or lack of it of any mainstream cryptocurrency will be unaffected.
> in order for sanctions to work, crypto needs to be banned
Not necessarily. Just use the secondary sanctions mechanism, same ones that make selling Russian gold problematic. Crypto, unlike gold, also permits one to publicly flag tainted wallets.
> Crypto, unlike gold, also permits one to publicly flag tainted wallets.
That's why I said I believe the Fed is working out the parameters of the ban. I don't think it will be an outright total ban, but some type of selective interdiction.
> why I said I believe the Fed is working out the parameters of the ban
Sanctions aren’t the Fed’s business.
If this were being worked on, and there is zero evidence it is, for all we get enamoured by crypto it’s too insignificant to merit serious attention at this level, it would be at Treasury and Commerce.
Currently it only helps the Russians. The Ukrainians aren't banned from banking, and can receive contributions and move money. The Russians on the other hand can leverage crypto to evade sanctions, work around SWIFT bans and support the war effort. Once folks catch on, restrictions should follow, in a perfect world. This world is far from perfect, though, so time will tell.
Crypto marketcap would have to go up massively to make that work with the little bit of crypto that is in active circulation. It will be a drop on a hot plate.
And yet those banks want to retain SWIFT access. My understanding is that even mainland Chinese banks didn't want to hold accounts for sanctioned entities in Hong Kong in 2020.
You really don't want to get cut out of the international banking system. It's not a good time. You lose your correspondent banking relationships and you get rekt.
In fact this happened humorously enough with Bitfinex/Tether and Noble Bank. After they talked Noble into banking them, they lost their correspondent banking relationship in the US and were forced into insolvency. [1]
People seem to think that it’s easy to create a SWIFT alternative (one that gains acceptance) and that Putin is logging into Coinbase to buy bitcoin.
Neither is going to happen.
I'm not sure why it wouldn't. You can easily launder crypto, disguise its origin and have a designated third party close the positions out at a banked exchange.
That's literally the value proposition of crypto. That you can conduct international transactions without permission.
So either...
(1) The raison d'etre hasn't been met, and therefore, it's not really providing any value over a permissioned system. Or...
(2) It works exactly as designed, allowing permissionless payments across borders and so oligarchs and demagogues can transact internationally in violation of international sanctions.
I don't see a good outcome. Am I missing something?
If a crypto coin transaction has passed through a wallet which is known to be held by a scammer (or Russian govt), you can blacklist that coin.
Tumblers help, but takes away credibility.
How is owning and trading cryptocurrency akin to dumping oil into a river? That’s a weird analogy. Obviously, the river is a public good that I share with others, it is not mine to pollute.
Banning cryptocurrency is not just “some restriction”. It is an authoritarian violation of my property rights.
> The environmental impacts of cryptocurrencies have been discussed at length here on HN and elsewhere.
The environmental impacts of cryptocurrency are not worse than any other economic activity, because any human activity requires energy. You are picking and choosing which activities are "bad for the environment" for purely political reasons.
> reining in war crimes is a public good, and sanctions are not yours to violate
Every war is a crime. These "sanctions" are also a crime and they are ruining the lives of innocent civilians who have nothing to do with the decisions of their government.
You are willing to give up your own freedom and comfort for the war effort and trying to enlist everyone else into your war.