How might Visa and Mastercard’s Russia ban impact the Bitcoin price?

Visa and Mastercard have pulled their payment services from Russia following its invasion of Ukraine.

| More on:
a mysterious person wearing a black hoodie points a finger to a vast illuminated graph tracking bitcoin value with bitcoin symbols floating above the chart.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Bitcoin price is up 2% today 
  • Cryptos are in the spotlight as Visa and Mastercard pull out of Russia 
  • Almost impossible for Russia to skirt sanctions on any large scale using cryptos 

The Bitcoin (CRYPTO: BTC) price has bounced back from a loss to a 2% gain following a strong run over the past few hours.

One Bitcoin is currently worth US$38,626 (AU$52,760), giving the world’s original crypto a market cap of US$740 billion.

Despite the rebound, the Bitcoin price remains down 10% over the past 7 days and down 20% year-to-date.

The Ripple (CRYTPO: XRP) price is gaining today too, up 1% since this time yesterday to 72.8 US cents.

XRP, the world’s number 6 crypto with a market cap of US$34.7 billion, remains down 15% for the year. We bring this particular token up for a reason.

If you’re unfamiliar with XRP, the token was created by Ripple Lab as a “digital asset built for global payments”.

According to CoinMarketCap, this implies that, “Ripple plans to rival money transfers usually conducted by the banking system. XRP would allow users to send money at a very low cost, attracting the potential interest of retail customers and banks alike.”

Which brings us back to Visa and Mastercard removing their payment services from Russia in response to its invasion of Ukraine. This comes atop the earlier ban of many Russian banks from the global SWIFT service.

With more Russian institutions and individuals locked out of traditional payment systems, will this impact the Bitcoin price and other payment focused cryptos like XRP?

Will Visa and Mastercard’s Russia ban impact the Bitcoin price?

Josh Gilbert, market analyst at multi asset investment platform eToro, sees the potential for an increased demand for cryptos as Russians are locked out from global credit cards. And greater demand could send the Bitcoin price higher.

According to Gilbert:

The latest Visa and Mastercard restrictions will further tighten how Russians are able to access capital, meaning we may well see an increase in demand for cryptoassets. Bitcoin is borderless, so at times like this, citizens can turn to cryptoassets to store and spend their capital.

The restrictions from Swift, Visa and Mastercard could see demand pivot to cryptoassets that specialise in payments, such as XRP, given its ability to instantly and efficiently move money across all corners of the world through its decentralised blockchain.

Emphasising that crypto is not something you just store in a digital wallet hoping the price will go up, Gilbert added:

The last few weeks have highlighted crypto’s real-world use cases, and everyday consumers now understand there is much more to crypto than just an investable asset. This could shepherd in a new era of finance; payments in under a matter of seconds, decentralisation away from corporations or governments, and the provision of finances when traditional methods are not available.

Despite greater clarity surrounding its real-world use cases, the Bitcoin price has yet to lift off in the wake of heavy selling following its November all-time highs.

Can Russia skirt sanctions with crypto?

One of the big concerns with cryptos like Bitcoin and XRP is that the Russian government may use them to do an end run around sanctions imposed by the West.

You’ve probably heard these debates, also linked to organised criminal activity, amongst various politicians and analysts yourself.

But the top brass at global crypto exchange FTX says it will be nigh impossible for Russia to do so on any kind of appreciable scale.

According to FTX president Brett Harrison and CEO Sam Bankman-Fried:

The world’s attention on Russia’s aggressive conflict with Ukraine, combined with the new omnipresence of cryptocurrencies, has created the natural question now being asked in all major media: can cryptocurrency be used by sanctioned parties to avoid US sanctions?

The short answer is: no.

Harrison and Bankman-Fried give a long list of security protocols in place to prevent sanctioned institutions from simply reverting to Bitcoin, XRP or other cryptos over fiat currency.

Among those protocols, they said:

Exchanges that can accept wire transfers as sources of fiat deposits know the identity of the source financial institution, and can therefore detect whether the currency is coming from, for example, a sanctions listed Russian bank, a blacklisted source, or some other problematic funds source.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Cryptocurrencies

Man sitting at a desk facing his computer screen and holding a coin representing discussion by the RBA Governor about cryptocurrency and digital tokens

Is it smart to use dollar cost averaging to buy Bitcoin?

Should investors consider a DCA strategy for cryptocurrencies like Bitcoin?

Read more »

A hip young guy works at his home workstation with two screens and a gamers chair, keeping an eye on his crypto investments.
Share Market News

Bitcoin price dips in August after soaring 22% in July. What’s going on?

The greater presence of institutional investors in crypto markets looks to be adding to the correlation between cryptos and other…

Read more »

A very sad beagle cross dog lays dejectedly on a sofa with his short legs stretched out in front of him in a pose of flat defeat as he stares sadly at the camera.

Expert panel slashes 2022 outlook for Dogecoin price. Here’s why

Originally created as a joke, Dogecoin still has a market value of nearly US$9 billion despite crashing 91% from last…

Read more »

an image of a gold bitcoin and a gold ethereum coin side by side against a backdrop of a graph with reda and green bars representing rising and falling prices.

Bitcoin price dips. Is Ethereum on track to dethrone the top crypto?

Bitcoin is up 22% since 1 July while Ethereum has leapt 56% higher.

Read more »

A woman holds a bitcoin token in her hand as she smiles at the camera in the background.

Why El Salvador is doubling down on Bitcoin despite the 2022 price crash

El Salvador still intends to issue a US$1 billion Bitcoin-backed bond, once market conditions improve.

Read more »

a mysterious person wearing a black hoodie points a finger to a vast illuminated graph tracking bitcoin value with bitcoin symbols floating above the chart.

The Bitcoin price is leaping 10% higher today. What’s going on?

Only a single one of the top 100 cryptos by market cap has lost value since this time yesterday.

Read more »

A person sitting at a desk smiling and looking at a computer.

The Ethereum price just shot up 12%. Here’s why

Investor risk appetite was spurred by Fed chair Jerome Powell’s comments that the rate of future interest rate increases may…

Read more »

a woman wearing dark clothing and sporting a few tatoos and piercings holds a phone and a takeaway coffee cup as she strolls under the Sydney Harbour Bridge which looms in the background.
Share Market News

Bitcoin or Cardano: which crypto is most widely held among Aussies in 2022?

The number of users on e-Toro’s platform holding Bitcoin increased 9% globally and 16% in Australia in 2022.

Read more »