The founder of cryptocurrency trading platform Binance has dismissed fears that the Kremlin could use virtual money to evade sanctions as he stated that "cryptocurrencies are too small for Russia".
Changpeng Zhao said that cryptocurrencies also defeated attempts to circumvent sanctions by being too traceable, adding that more attention should be paid to banks. In a statement, Zhao said the media and politicians should focus on conventional lenders and the oil and gas market.
"Currently, the media and politicians are putting a lot of effort and focus on cryptocurrencies and sanctions," he said. “The truth is that cryptocurrencies are too small to Russia. If we look at cryptocurrency adoption today, there are probably around 3% of the world's population with some form of cryptocurrency exposure (i.e. owning some cryptocurrency). Of them, most only have a small percentage of their net worth in cryptocurrencies. Less than 10% on average. Therefore, there is probably only less than 0.3% of the global net worth in crypto today. This percentage applies equally to Russia.”
The Wall Street Journal reported last week that the United States is considering impose sanctions on Russia's cryptocurrency market, amid concerns that currencies like bitcoin offer an alternative way, outside the international banking system, to conduct irreversible cross-border transactions. Zhao denied that this applied to Binance, saying that it "applies the same sanctions rules as banks, according to international standards."
Zhao said that the use of blockchain in cryptocurrency transactions meant that crypto assets "are not an effective tool for illicit activities." A blockchain is a decentralized, digital ledger maintained by a network of computers that records every cryptographic transaction and can be examined by anyone. Zhao added that using privacy-focused digital currencies such as Monero wouldn't work either because Monero's market capitalization is $3 billion compared to Russia's GDP, a measure of economic output, of $1, 5 billion.
“Another reason Russia would not want to use crypto is that it is too traceable. And governments around the world are already very adept at tracking it down,” Zhao said.
Zhao, whose personal wealth has been estimated at $1.9bn (£1bn) by Forbes magazine billionaires listsaid this week Binance had donated $10 million to help the humanitarian effort in Ukraine and help those fleeing the conflict.
