New Delhi: Harsh western sanctions have failed to deter Russian investors in conducting transactions in Bitcoin and other cryptocurrencies, according to a report by Bloomberg.


Data from blockchain analytics firm Kaiko showed that rouble-denominated Bitcoin trading volume rose Saturday to its highest level this year, though the overall flows appear to be relatively small.


Meanwhile, the majority of the rouble-denominated crypto trading volume appears to be conducted with the Tether stablecoin, which claims to be backed one-to-one with fiat.


Kaiko said rouble denominated Bitcoin trading pairs saw a higher growth by ‘magnitude’ on March 5. The average trade size of Bitcoin rouble transaction on Binance hit a 10-month high of about $580 on February 24, when Russia invaded Ukraine.


The efforts to cut off crypto as a sanctions workaround follow the sweeping penalties imposed on Russia by the US and its allies, including a move to bar some banks from the SWIFT messaging system that connects financial institutions worldwide. The moves also underscore the significant role that digital assets are playing in a conflict testing global security.


Andrew Tu, business development manager of crypto algorithmic trading firm Efficient Frontier, said, “Perhaps more Russian retail investors are looking to get out of fiat exposure altogether in favour of BTC. While technically, US dollar sanctions probably cannot be realistically applied to USDT holders, I imagine that some people are simply taking additional precautions.”


The trading from Russia only counts as a fraction of the total volume of Bitcoin's globally.


Accordingh to Kaiko, Bitcoin’s average daily trading volume varies between $20 billion and $40 billion. On March 5, the total trading volume of BTC/RUB was about $14.2 million.


Only three global crypto exchanges, Binance, Yobit, and LocalBitcoins, offer rouble-denominated crypto trading pairs, Kaiko said.


While exchanges, including Binance and Coinbase, said that they would not ban ordinary Russians from using their service, there have been a growing effort to block users related the sanctioned individuals and entities. Coinbase, for example, reported that they blocked over 25,000 addresses related to the sanction list.


Caroline Bowler, chief executive of Australian crypto exchange BTC Markets, said her company is blocking Russian entities that are under sanctions. At the same time, it’s noticed an increase in trading by individuals associated with Russia.


She said, “This uptake in Bitcoin in particular relates to retail, who are out there aggressively buying in small amounts.”


Paolo Ardoino, chief technology officer, USDT issuer Tether, said on Twitter on March 4 that USDT, as a centralised stablecoin, “has to comply with requirements of central authorities.”