Sanctioned countries could use crypto mining to evade restrictions as the current size of the market isn't big enough for countries like Russia to just transfer its wealth into cryptocurrencies, the International Monetary Fund wrote in a recent report.
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The international body says mining for energy-intensive blockchains like Bitcoin can allow countries to "monetize energy resources, some of which cannot be exported due to sanctions."
"The monetization happens directly on blockchains and outside the financial system where the sanctions are implemented. Miners can also generate revenues directly from users that pay transaction fees to miners," the IMF said.
While the current share of crypto mining in sanctioned countries is relatively small, risks to financial integrity remain. For example, the monthly average of all bitcoin (EXANTE: Bitcoin) mining revenues last year was about $1.4 billion, of which Russian miners could have captured close to 11%, and Iranian miners to 3%, the IMF noted.
The regulator also stressed that repercussions of the Russian invasion of Ukraine will test the resilience of the financial system through various channels, including [...] acceleration of "cryptoization in emerging markets, direct and indirect exposures of banks and nonbanks and possible cyber-related events."
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