Will sanctions affect trust in payments networks?

Visa and Mastercard have blocked several Russian financial institutions from its payments systems. A run on Russian banks has begun.

Why should we care?
The financial leaders of countries imposing sanctions now have to walk a thin rhetorical tightrope: If expulsions from financial technologies can cripple domestic economies, then what keeps similar measures from wiping out the wealth of everyday citizens at home? Of course, the disruption of payments systems within Russia was an extraordinary measure in response to the invasion of Ukraine, but it also highlights the vulnerability of exclusively digital and centralized financial systems. “There are consequences to putting everything on the Internet, and they usually only become visible when infrastructure begins to crack,” commented tech historian Kevin Baker. While cryptocurrencies rely on much of the same core infrastructure—internet-based networks—many still see crypto as a monetary alternative less vulnerable to political intervention. Bitcoin has already seen its price recover by more than 6% today to over $43,000, and Bitcoin volume in the Russian ruble has reached a 9-month high. We should expect high-level debates and scrutiny over financial security in the weeks to come, as well as large-scale moves to crypto or even analog forms of wealth.