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Russia’s invasion of Ukraine spotlights the urgent need for crypto policy

February 24, 2022, 7:10 PM UTC

For the vast majority of those watching the rapid rise of cryptocurrency, its emergence has been something of a curious novelty.

Is crypto a high risk-reward investment? A shiny new tech toy? The future of money? A pyramid scheme?

Russia’s nascent war against Ukraine, however, shows that it’s time for the public at large, crypto advocates, and the federal government to hold much deeper conversations about the role of digital currencies in our economic future.

As the U.S. and its NATO allies prepare to launch stiffer sanctions against Russia for its attack on a sovereign nation, which could include cutting off access to the Society for Worldwide Interbank Financial Telecommunications (SWIFT) global financial payments system, the The New York Times reported Wednesday that Russian leaders could blunt the impact by trading with friendly faces on dark web cryptocurrency markets. 

Federal, global, and commercial officials have said other foreign foes of the U.S., including Iran and North Korea, have already turned to digital currency to raise capital following sanctions from democratic nations.

“Sanctions are some of the most powerful tools the United States and European countries have to influence the behavior of nations they don’t consider allies,” Times reporters Emily Flitter and David Yaffe-Bellany wrote. 

“The United States in particular is able to use sanctions as a diplomatic tool because the dollar is the world’s reserve currency and used in payments worldwide. But American government officials are increasingly aware of the potential for cryptocurrencies to lessen the impact of sanctions and are stepping up their scrutiny of digital assets.”

As a few skeptics of the Times’ reporting noted, we don’t yet know how successfully Russia could use crypto markets to soothe the effects of any U.S.-NATO sanctions, or whether Russia will require much outside financial assistance after raking in huge profits off energy exports in recent years.

Russia’s need for crypto-related revenue might also be lessened if the European Union opposes ending the federation’s SWIFT access. (Reuters reported Thursday morning that the EU doesn’t support cutting off Russia from SWIFT at this moment.)

But Russia’s potential ability to circumvent sanctions through crypto speaks to a larger concern about the ability of foreign adversaries to devalue the dollar via existing and future digital currencies, thereby reducing America’s influence over global order.

At a time when the U.S. lacks the political will to place boots on the ground in many foreign conflicts, including Ukraine, financial might remains one of America’s greatest geopolitical strengths. That leverage, however, is threatened by the rise of digital currencies, as the Treasury Department wrote in an October 2021 report

“These technologies offer malign actors opportunities to hold and transfer funds outside the traditional dollar-based financial system. They also empower our adversaries seeking to build new financial and payments systems intended to diminish the dollar’s global role. We are mindful of the risk that, if left unchecked, these digital assets and payments systems could harm the efficacy of our sanctions.”

Already, some crypto champions are fretting about an American backlash against digital currencies, fearful that federal legislators could use the Russia invasion as a pretext for onerous regulation. Yet this moment was bound to arrive for blockchain boosters. The decentralized nature of digital currencies, combined with fast-evolving technologies that enable their illicit use, make it ripe for bad actors. 

The U.S. likely can’t stop Russia, China, and other rivals from creating their own central bank digital currencies or financial payment systems. It can, however, be at the forefront of shaping the global crypto landscape, setting precedents via regulations and standard practices. 

While Congress has started discussing potential legislation and federal agencies are ramping up enforcement, crypto policy remains in its infancy. If America’s crypto proponents, tech industry, and everyday investors want a seat at the table, the time to speak up is now.

Want to send thoughts or suggestions for Data Sheet? Drop me a line here.

Jacob Carpenter


The price of war. Cryptocurrency prices sank and tech stocks generally held steady Thursday as Russia’s overnight invasion of Ukraine rattled investors across the globe. Bitcoin prices were down 5% over a 24-hour period as of Thursday afternoon, while Ethereum prices dropped by 7% during the same time frame. The tech-heavy Nasdaq 100 rose by about 1% in mid-day trading Thursday, in line with the broader Nasdaq exchange. 

Twice as nice. Tesla plans to open a second plant in Shanghai, with work potentially beginning in the coming weeks, Reuters reported Thursday, citing two sources familiar with the matter. The second plant would allow Tesla to make roughly two million cars per year in China, where government officials have largely supported the California-based company’s expansion. The cost and timeline for construction were not immediately known.

Alibaba disappoints. Chinese e-commerce giant Alibaba endured its worst quarter of growth since going public in 2014, as revenues only increased 10% year-over-year amid relatively slow retail sales and growing competition in China, CNBC reported Thursday. Alibaba showed $38.1 billion in sales for the holiday quarter, short of analyst forecasts of $38.7 billion, and saw a 23% year-over-year decline in earnings per share. The company’s U.S.-listed shares were down 4% in mid-day trading Thursday.

Easing up. Google scaled back some of its COVID-19 policies last week, including its company-wide vaccine mandate, as the search outfit begins to gradually bring employees back into offices, The New York Times reported Wednesday. In addition to dropping the vaccine requirement, staffers will no longer need evidence of a negative COVID test to enter buildings and won’t have to wear masks in nearly all facilities. Employees who want to work in Google offices will still need to show proof of vaccination, though staffers working from home no longer face punishment for remaining unvaccinated.


Who needs Rosetta Stone? Meta founder and CEO Mark Zuckerberg wants his employees to “build awesome things,” per his updated corporate values. And here’s one of them: artificial intelligence capable of immediately translating all languages. Zuckerberg told attendees of an A.I.-focused Meta event Wednesday that the company has started work on the technology, which he expects will be delivered “in our lifetimes.” He didn’t elaborate, however, on the scope of Meta’s work toward that goal, which is part of Meta’s broad portfolio for developing highly advanced technologies.

From the article:

Meta’s ambitious universal translation project is part of a broader push to build out the company’s translation capabilities for the metaverse. “This is going to be especially important when people begin teleporting across virtual worlds and experiencing things with people from different backgrounds,” Zuckerberg said.

As part of these efforts, Meta’s AI researchers have begun to build an AI model called “No Language Left Behind” that is supposed to be able to learn new languages with less training data than existing machine translation models to more easily understand languages like Luganta, a language spoken by an estimated 2 million people in Uganda.


The U.S. threatened a chip blockade if Russia invaded Ukraine. Now Biden must weigh the pros—and cons—of following through, by Eamon Barrett

Russian cyberattacks could soon strike the west, analysts say. ‘The risk right now is high and rising’, by David Meyer

Nasdaq nears a bear market, but here’s how stocks have historically been affected by war, by Chris Morris

The Russian stock market is experiencing the fifth worst crash in history, by Thyagaraju Adinarayan, Srinivasan Sivabalan, and Bloomberg

The $200 billion club now has 0 members as Elon Musk’s wealth tumbles, by Jill R. Shah and Bloomberg


A crowning achievement. If the gamer in your life is busy this weekend, there’s a decent chance they’ll be playing Elden Ring. The new FromSoftware role-playing game—developed in consultation with Game of Thrones novelist George R.R. Martin—is drawing rave reviews as a sprawling, rapturous adventure. Among the plaudits from critics: “a masterpiece,” “exactly what fans want it to be,” “one of the best video games of the last decade.” The title boasts a 97 score on Metacritic from 46 reviewers, none of whom offered less than a 90 rating. Elden Ring drops Friday on PlayStation, Xbox, and PC.

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