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Sunday, 27 February 2022

The war in Ukraine is impacting semiconductors, global aviation + Could crypto be the loophole Russians use to circumvent sanctions?

Another potential victim of the Russia-Ukraine crisis: Semiconductors (as if they weren’t having a bad enough year). Russia’s war on Ukraine could disrupt the supply of neon gas and metal palladium, both of which are used to manufacture conductors, according to analysts cited by the Wall Street Journal. The two countries together produce nearly 50% of semiconductor-grade neon, while 37% of the world’s palladium production comes from Russian mines. A prolonged war would drive up prices and lead to more shipping delays, potentially delivering a blow to an already fragile semiconductor industry, which was just beginning to show signs of hope. Hyundai had said last month that the company expects an increase in semiconductor supply in 2Q2022.

The war in Ukraine is also having spillover effects on the global aviation industry, as countries impose no-fly zones and airlines stop operating flights to Russia, among other measures, according to CNBC. Aside from the risks of venturing into active warzones like Ukraine, a handful of EU member states have banned Russian flights in response to the Ruskies’ invasion of Ukraine. Lufthansa Group and KLM have reportedly evacuated their crews from Ukrainian territories and announced a curb on flights to and from Russia. Russia, in turn, has vowed to implement similar restrictrictions in retaliation, and promised a swift response to the flight curbs enacted by EU countries and Western airlines, according to BBC. All of these measures are forcing airlines to take longer routes to avoid Russian airspace, and could undercut their earnings, industry sources say, according to the Wall Street Journal.

Could crypto be the loophole Russians use to circumvent sanctions? After Russia’s banking system was slapped with sanctions from a number of countries, the crypto market is still trying to figure out where it falls in all of this. While the West’s sanctions aim to limit Russia’s ability to do business in USD and include restrictions on elite citizens and their families, they didn’t specify restrictions on crypto transactions. Since some cryptocurrencies keep their customers anonymous, while others are based in jurisdictions beyond the scope of sanctions, wealthy Russians are left with a loophole allowing the crypto market to “serve as a tool wealthy Russians could use to circumvent those sanctions,” Bloomberg writes.

…which explains why Ukraine is trying to get a hold of Russian politicians’ crypto info: The Ukrainian government is offering rewards for intel on any information on the crypto wallets of Russian and Belarusian politicians, Vice Prime Minister Mykhailo Fedorov said in a tweet.

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