Speculation grew over whether crypto transactions could help Russia bypass restrictions placed on its financial system by the United States, after President Joe Biden on Thursday announced stricter sanctions against the country.

Biden announced restrictions against Russia’s two largest banks and several wealthy elites in the country. While the move effectively blocks them from the U.S. financial system, crypto could provide an alternative channel for transactions.

But he  held off on blocking Russia from the SWIFT network, a major cross-border payment system. Russians have not yet lost access to the global financial system. In his speech last night, Biden also did not address whether crypto could bypass sanctions.

A report from Bloomberg suggested blacklisted Russians could indeed use crypto to bypass economic sanctions by the United States. As it stands, governments have no means of blocking non-custodial crypto wallets.

Crypto use could potentially lessen the impact of recent sanctions.

Canada’s Freedom Convoy Crackdown

The Canadian government had recently invoked emergency powers to block more than 30 wallets associated with the trucker-led “Freedom Convoy.” But those wallets were all custodial, and government regulation was only able to extend as far as crypto-to-fiat exchanges.

Still, Canada’s move was widely criticized by the crypto community. It also saw crypto proponents urging users to switch to non-custodial wallets to avoid regulation.

In an official response to a Canadian government order, non-custodial wallet provider Nunchak said–

We do not collect any user identification information beyond email addresses. We also do no hold any keys. Therefore, we cannot “freeze” our user assets.

Unless the government is able to access a user’s wallet key, there is effectively no means to prevent transactions through crypto. The exchange to fiat currency, however, is another matter.

Russia a crypto powerhouse?

After bans on crypto mining in hubs China and Kazakhstan, traders see a lot of potential for mining in Russia.

A Russian bitcoin miner, who did not wish to be named, told Coingape-

The country has an abundance of electricity due to its large gas reserves. The relatively cold climate also reduces the need for cooling equipment.

Crypto adoption is also rapidly rising in Russia. The government estimates that Russians hold at least $200 billion worth of crypto, or 12% of the overall market. Recently, the Finance Ministry had submitted a bill that will recognize and regulate crypto as a tradable asset in the country. But the Central Bank has largely opposed this move.

Prime Minister Justin Trudeau has invoked the Canada Emergencies Act, a law that allows the government to freeze the bank accounts of protesters without the necessity for a court order.

This will be the first time the law is enforced.

The Ontario Provincial Police and the Royal Canadian Mounted Police are reportedly aiming to freeze 34 cryptocurrency wallets related with the Freedom Convoy.

The Freedom Convoy began as a protest against COVID-19 vaccine mandates for border crossings, but quickly evolved into a demonstration against pandemic restrictions in general.

Beginning in late January, hundreds of cars and trucks formed long stretches from various locations and traveled through Canadian provinces before meeting on Ottawa on January 29 for a rally on Parliament Hill.

A large number of pedestrian protesters then joined the convoys of vehicles. In addition, several offshoot protests blocked access to the US border and provincial capitals.

BTC total market cap at $817.525 billion in the daily chart | Source: TradingView.com

Canada Emergencies Act: Clampdown Against Anti-Vaxxers

Canada’s federal law enforcement authorities, in tandem with the Financial Transactions and Reports Analysis Center of Canada (FINTRAC), are examining cryptocurrency payments made in support of the country’s anti-vaccine protest.

At least one cryptocurrency wallet containing more than $1 million in Bitcoin has been substantiated as part of the HonkHonkHodl action plan to assist truckers via cryptocurrency.

Bitcoin, Ethereum and Cardano became among of the most sought-after cryptoassets used to assist truckers after GoFundMe decided to freeze nearly $10 million in donations collected on its platform.

Related Reading | Could Canada Turn Anti Bitcoin? Behind The Layers Of Trudeau

Canada’s federal authorities have discovered approximately 29 Bitcoin addresses used to swap the cryptocurrency, which is currently worth between $0 and $1.1 million.

The Canada Emergencies Act was amended to make protesters’ funding a target.

Deputy Prime Minister Chrystia Freeland told Trudeau that financial institutions can instantly freeze or restrict bank accounts associated with trucks without fear of legal repercussions.

“So we’re looking at full-fledged financial warfare against truckers,” Krystal Ball’s co-host of “Breaking Points,” Saagar Enjeti, said.

Not All In The Same… Truck

Meanwhile, not all Canadian leaders support this severe course of action. The premiers of Alberta, Saskatchewan, and Manitoba, according to a Reuters report, are opposed to the move.

Quebec’s Premier François Legault also expressed displeasure with the move, saying he feared it would “add fuel to the fire,” the Montreal Gazette quoted him as saying.

Civilian protests have increasingly made use of bitcoins as a means of donation around the world.

In Ukraine, for instance, volunteer organizations and non-governmental groups received a 900% rise in financing via Bitcoin in 2021, probably in response to Russia’s growing military posture along its borders.

Related Reading | Bank of Russia Maintains Crypto Ban Stance As It Begins To Test Country’s CBDC

Featured image from Cryptobase, chart from TradingView.com