The crypto market kickstarted the week on a positive note for the second consecutive day. On the 1st of March 2022, the price of Bitcoin gathered momentum as it hit $44K at one moment despite the selloff in other risky assets. Amid the geopolitical crisis arising out of the Russian invasion of Ukraine, cryptocurrency transactions in those two warring nations surged.
Speculators feel that the current spike in transaction volume was partly due to the announcement of sanctions from the U.S. and its allies. Miami bureau chief for Bloomberg Jonathan Levin put out a thought-provoking article on the current crypto market situation. Levin questioned whether the current market buoyancy is good for the digital asset industry.
“It’s not as simple as that”, argues Levin. Both Ruble and Hryvnia-based crypto trading pairs witnessed a sharp increase since the U.S. announced its first sanctions on Russia on Feb. 22, according to research firm Chainalysis. The experts pointed out the possibility that some of that may represent illicit funds.
Ukraine and Russia are ranked No. 4 and No. 18 in Chainalysis’s Global Crypto Adoption Index. Levin said, “in that sense, it’s understandable for their residents to stash their money in digital coins amid the mayhem.” He hailed this as a victory for crypto innovation.
However, if it is being used to evade sanctions which he notes that it’s happening to some extent, is harmful to assets like Bitcoin.
The argument of crypto being a haven for illicit funds is getting old
According to Levin, cryptocurrencies’ main appeal lies in the fact that “they’re not issued or controlled by any state or central entity”. But critics in Congress and at regulatory agencies beg to differ, continue to refer to crypto’s illicit use. On the other side, there’s has been intense debate over whether monitoring digital assets are as difficult as envisaged.
Last month, the U.S. confiscated more than $3 billion worth of bitcoins stolen in a 2016 hack, highlighting the capabilities of authorities in tracking the on-chain money trail. Levin concludes that the pump in demand may help boost the prices in an upward momentum for now, but cautions that the asset class’s fight for broader adoption would be dented if it is directed towards funneling illicit activities.