Financial nuclear bombs begin to backfire: global energy and rare metals soar, and the crypto market is in chaos

The impact of the Russian-Ukrainian conflict on the lives of ordinary people has gradually become apparent, and the financial nuclear bombs of Europe, the United States and Japan have begun to backfire. The giant US investment bank is negotiating with the SEC, and the Japanese Digital Currency Exchange Association is preparing to ban Russian users.

On March 2, the EU Finance Ministers reached an agreement to ban the use of Russian digital currency in order to ensure that economic and financial sanctions against Russia are more effective. For details, please refer to the previous article of ChainDD: [ChainDD Exclusive] Bitcoin skyrocketed, the transaction volume of digital currency ruble increased by 10-20 times, and the EU announced that it would restrict digital currency transactions.

This is another big move after the financial nuclear bomb. The main reason is that Russia's global market share in digital currency trading and mining cannot be underestimated.

The estimated number of Russian currency holders is 17.3 million. Currently, the mining industry accounts for 11% of the world's total.

After the Russian government announced that the Moscow Exchange would close all overseas stock trading, the Russian investment market was effectively cut off. Coupled with the intervention of the United States, the ruble plummeted.

As an alternative, digital currency has become mainstream. TASS reported that Russia's investment in the digital currency market is about 5 trillion rubles. ChainDD also mentioned in the previous article that on February 28, the global daily trading volume of Bitcoin denominated in rubles exceeded 1 billion rubles. Data showed that on that day, the trading volume of rubles and the stable currency "Tether" pegged to the US dollar on Binance Exchange alone reached 35 million US dollars. On March 1, Tether's ruble trading volume reached 2 billion rubles, more than 10 times that before the Russia-Ukraine conflict on the 24th.

However, judging from current public opinion, there are few responses in the international market within the digital currency trading industry.

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Japanese licensed exchanges have to respond

Japan is a very special market for the digital currency trading industry. Licensed exchanges are not only directly led by the Japanese Digital Currency Trading Association (JVCEA), but also directly supervised by the Financial Services Agency. For news about the Japanese digital currency trading industry, please follow the ChainDD Japan special topic and check out ChainDD's tracking of Japan's CBDC and digital currency trading industry.

After the EU reached an agreement, Japan began to prepare for a response. According to the Nikkei news website, yesterday (March 3), the Japan Digital Currency Exchange Association announced that it was considering all licensed exchanges to suspend transactions with Russia. Hasuo Satoshi, CEO of Coincheck, the exchange with the largest trading volume in Japan, said that he is currently negotiating with the Japanese Financial Services Agency on follow-up measures.

Therefore, these more than 30 exchanges in Japan may cut off all transactions with the Russian digital currency market at any time.

The news also stated that as alternative options, suspending Russian miners' bank transactions and freezing the digital currency accounts of Russian government officials are very likely.

Currently, major digital currency exchanges in Japan are also considering the negative impact of huge fluctuations in digital currencies, and many exchanges are using derivatives to try to balance the market.

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What effects can be expected?

However, according to the observation of the editor of ChainDD, it is unlikely that international exchanges, which are borderless and decentralized, will respond directly, and these exchanges are the giants in the digital currency trading industry. In terms of size, Japan's more than 30 licensed exchanges are incomparable.

In addition, many digital currency holders will not be locked in. Anonymity is the essence of Bitcoin, and holders will not be directly hit. It is also unlikely in terms of technical implementation. Except for a few countries that truly legally and transparently trade digital currencies, such as Japan, they can be regulated through the existing "Financial Transactions Law" and "Foreign Exchange Foreign Trade Law".

However, the EU's idea of ​​directly banning digital currency users in a certain country may also reflect the regulators' lack of understanding of digital currency.

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Financial sanctions are starting to bite

Since the financial nuclear bomb was dropped, the traditional financial markets of the European Union, the United States, and Japan have been in turmoil.

American investment giant BlackRock announced all transactions of Russian securities on the 28th of last month. But major investment giants are struggling.

The Wall Street Journal reported on the 3rd that several US investment management companies, including BlackRock, are negotiating with the US Securities and Exchange Commission (SEC), especially the regulatory treatment of Russian-related funds. According to SEC regulations, investment management companies are required to hold non-current assets within 15% of the total fund, but if Russian stocks and bonds cannot be sold, the giant management company will soon reach the limit.

Morningstar, a U.S. investment trust rating agency, initially estimated that U.S. investment trusts and ETFs hold more than $58 billion in Russian stocks and $13.1 billion in Russian bonds.

Due to the suspension of the Moscow Stock Exchange, Russia has announced that it will suspend the trading of all foreign stocks. The current situation in Russia is also unclear, which increases investment risks.

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Energy and rare metals surge

After the conflict between Russia and Ukraine, the shortage of rare metals and energy has gradually begun to have a market response. On March 2, oil prices once rose to the highest level in nearly a decade. The International Energy Agency held an interim ministerial meeting on March 1 and decided to jointly release 60 million barrels of crude oil reserves, which is like putting out a fire with mouthwash. Moreover, Saudi Arabia said on the same day that it would not increase production, and it may still soar.

The supply of rare metals has been hit hard. In addition to crude oil and natural gas, Russia is also an important exporter of key industrial metals such as copper, aluminum, zinc, tin and nickel. 43% of palladium used in major automotive parts depends on Russia.

70% of neon, which is indispensable for semiconductor manufacturing, relies on Ukraine. Most of it is shipped from Odessa in southern Ukraine to the demand area via the Black Sea. The conflict between Russia and Ukraine has led to the closure of the refinery in Odessa. The port of Odessa has also been closed. The impact of the semiconductor crisis caused by the new crown has not yet recovered, and global semiconductor production has been hit hard.

The price of aluminum on the London Metal Exchange reached $3,580 per ton on the 2nd, a record high. Russia is the world's third largest aluminum producer. The price of nickel ore per ton also rose to its highest level since 2011, at $26,505 per ton.

The impact on the lives of ordinary people has also begun to become apparent. Rising energy prices have also led to rising prices, and inflationary pressures in European countries have continued to rise. The month-on-month inflation rate in the eurozone reached 5.8% in February.

Data from the Food and Agriculture Organization of the United Nations shows that Russia is the world's largest wheat exporter, and together with Ukraine, it accounts for a quarter of global wheat exports.