Geopolitics is always messy business.
The situation with Russia and China versus the West keeps moving to higher levels. We know about the war in Ukraine, with no end in sight. Then we have the US-China trade war. Nobody really can figure out how that ends.
Then we have other battles taking place. The US put sanctions on Russia years ago. They only grew after it invaded Ukraine.
One of the most recent moves, however, was by the EU. This led to the freezing of $30 million in USDT in wallets that were tied to Russia.
Governments are doing what governments do.
It is not sinking in.
Governments believe in their own superiority. They feel they are infallible, machines who exist to control the situations surrounding the masses. The people who populate these institutions often get a "God complex". In the US, this is the case with many federal judges. Politicians and bureaucrats can be the same.
Another example, not only from the US but Europe, is the neocons. These people have waged wars for decades, losing every one since the end of WW2. Korea. Vietnam. War on Terror. Afghanistan.
The West has a long history of going to battle, to come up empty.
For decades, the goal was to destroy Russia. The collapse of the Soviet Union wasn't enough. People like John Bolton, Lindsey Graham, and Hillary Clinton feel the West could take down Russia and reap the estimated $17 trillion in minerals and fuels.
With the EU never saw a situation it didn't feel the need to regulate. Cryptocurrency is no exception. Ironically, there is a philosophical difference in the approach the US is taking versus the EU. The former is pushing more of a market, private business approach to innovation.
Either way, the regulatory framework the EU put in place is being used.
The move comes after Tether, the issuer of USDT, froze wallets on the Russian crypto exchange Garantex, disabling access to over 2.5 billion rubles (approximately $30 million).
The freeze was initiated shortly after Garantex was targeted by European Union sanctions in early March, leading the platform to suspend operations.
Basically the EU pushed an exchange to freeze the funds of wallets that are believed to be Russian. There is no evidence it was the Russian government or Putin involved. To these people, that matters none.
So what does Russia do to counter?
It makes the world acutely aware of what cryptocurrency means.
Russia is considering implementing technology to counter what the West is doing.
The episode has prompted renewed discussions around digital financial infrastructure in Russia, particularly on how the country can shield its economic activity from external disruptions.
A domestically developed stablecoin could serve as an alternative to Western-issued tokens, offering a new layer of financial sovereignty.
This should be a no-brainer. Of course the Russians (or any country) could create its own stablecoin. Tether or Circle do not have a monopoly on this. Of course, they will avoid assets such as US Treasuries, which also can be frozen. However, there are many options out there.
Financial sanctions tend to focus upon severing a country's banking system from the rest of the world. This is why weaponizing SWIFT was so important. It hindered Russian banks from engaging in cross border payments.
Cryptocurrency alleviates this. Since blockchain networks operate globally, there is really no movement of funds geographically. Nodes process transactions without regard to where they are originated. To the system, they simply are in cyberspace.
Russia is proving what many in the industry have known.
Governments think they are in charge. This is the case right up to the point they implode.
Look at history. There are a ton of governments that went down without a single shot being fired. The Soviet Union is the best example over the last 50 years. As we go back through time, we find many.
Trade was always conducted outside the hands of governments. In fact, they often caused situations which forced merchants outside the system. This stems from the fact money was not created by governments, for governments. Instead, it was means to facilitate trade.
Then we have the digital world. For all the moves to de-globalize, entering the online world means instant globalization. The Internet is everywhere because it is nothing more than a series of nodes connected together. It is here where they communicate, sending and receiving data.
Naturally, nodes do not see a difference in data. It matters none to the system whether it is financial, a piece of copyrighted music, a spreadsheet, or a pornographic picture. Nodes just process the data.
Governments try to control the system by going after the physical location of the node operators (or the nodes themselves). With blockchain system, this is impossible since the nodes are located throughout the world (for many of these networks). The key is the nodes are uncorrelated. This is much different from Web 2.0 where Bank of America controls all its servers.
Then we have peer-to-peer transactions. This is another level which makes governments impotent. Consider the Napster example and how all the might of governments proved they could do nothing.
Music. Movies. Money.
Governments refuse to accept they cannot control this. More infrastructure is only going to make the situation worse for them.
In the near term, it looks like Russia is going to thumb its nose to the West.
