Cryptocurrencies have long been at the forefront of new innovations to transform different industries in the digital world. It is not only private entities who see opportunities in this growing technology, but even state governments have explored potential uses for this revolutionary advancements. Unfortunately, not all foreign states are using cryptocurrencies for reputable purposes. Some rogue regimes have found a new way to use them, and this is to evade the U.S., E.U., or U.N. sanctions.
The world has benefited from the innovative features of Bitcoin, such as new ways for security and privacy. Some altcoins fundamentally possess features that provide an avenue for dodging sanctions from other nations. Privacy coins like Monero and Zcash, which make no pretense that they are trying to follow Satoshi’s vision of a global peer-to-peer cash system, tout anonymity and supposedly frictionless immutability transactions, prevent oversight. Those qualities are being exploited.
A report by Vice indicated that the North Korean state-sponsored hackers had gained more than $2 billion in fiat and digital currency to help pay for the state weapon program. Their extensive expertise in mining, hacking exchanges, cryptojacking, and more help them launder established coins such as Monero through unregulated foreign exchanges. There is talk the rogue nation is also currently developing a state-run cryptocurrency to further get around international sanctions and the global financial system.
Thousands of miles away from Pyongyang, another rogue regime in Cuba is exploring how to use cryptocurrency for economic gain. The Cuban government proposed the use of cryptocurrency as part of a series of measures seeking to improve the Cuban financial crisis exacerbated by long-enduring U.S. sanctions. These measures were announced recently by President Miguel Diaz-Canel and his administration on state-run TV. Included in the announcement was a promise to raise the income for around a quarter of the country’s population. This plan comes after the Cuban president accused U.S. President Donald Trump of engaging in financial persecutions strangling the import of goods and resources in Cuba.
Venezuela recently introduced its state-owned currency ‘El Petro.’ The move is to circumvent U.S. sanctions and gain access to international financing. The government also hopes it will help weather-related hyperinflation, which the country is facing due to its development failures. This token supposedly is backed by the national oil and mineral reserves and intended to function alongside the plummeting Venezuelan bolivar. Following Venezuela’s lead, oil-rich Iran, another U.S.-sanctioned country, stated through its central back its consideration of creating its currency, possibly called the Crypto-Rial.
Even Russia is getting in on the action. The nation announced they would begin to integrate the use of cryptocurrency into its markets after the U.S. imposed several economic sanctions onto the country over the last few years as a form of retaliation against perceived disruptive activity on the world stage. After the U.S. threatened to disconnect Russia from the globally accepted SWIFT banking network, the government started work developing a national currency referred to as the Crypto Ruble to avoid financial sanctions from the rest of the world.
How sanctions are designed is quickly becoming obsolete in light of cryptocurrencies and similar innovations. The decentralized nature of cryptocurrencies makes enforcing these penalties challenging. Regulation can be achieved without over-regulating and simultaneously avoiding hampering innovation. Blockchain developers must act responsibly by building products on public chains such as Bitcoin SV, which foster innovation without embracing anarchy and lawlessness.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.