Crypto consider ukraine call to freeze

Ukraine has requested major cryptocurrency exchanges restrict the activities of Russian account holders.

Mykhailo Fedorov, the Vice Prime Minister and Minister of Digital Transformation of Ukraine, tweeted the appeal on February 27, asking that “all major crypto exchanges block addresses of Russian users.”

“It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians but also to sabotage ordinary users,” Fedorov said.

Economic sanctions and the upcoming exclusion of some Russian banks from the global SWIFT financial system have already prompted concerns of a cash run in Russia. But crypto companies have so far not agreed with the Ukrainian request to block all Russian users.


Crypto is meant to provide greater financial freedom for people across the globe.”

The representative added that the exchange is taking measures to ensure that sanctions are against sanctioned entities in Russia while “minimizing the impact to innocent users.” “Should the international community widen those sanctions further, we will apply those aggressively as well,” the spokesperson added.

Some crypto executives believe that sanctions against Russia are eventually inevitable. However, they should target only select persons as the U.S.
Office of Foreign Assets Control usually does.

“We think that the sanctions will be inevitable by naming new sanctioned persons as US/OFAC has done in the past.

Crypto consider ukraine call to freeze

A Binance spokesperson told Reuters that the cryptocurrency exchange is “blocking accounts of those on the sanctions list (if they have Binance accounts) and ensuring that all sanctions are met in full.”

Binance has no plans to extend the ban to typical Russian account holders.

Coinbase has refused the request and told Decrypt that “a unilateral and total ban would punish ordinary Russian citizens who are enduring historic currency destabilization as a result of their government’s aggression against a democratic neighbor.” However, the organization will comply with any future sanctions.

Jesse Powell, the co-founder & CEO of the Kraken cryptocurrency trading post, went further in a Twitter thread to explain the firm’s stance, in which the company “cannot freeze the accounts of our Russian clients without a legal requirement to do so.”

With that, he warned: “Russians should be aware that such a requirement could be imminent.” Powell also said that foreign states, such as the United States, could impose such sanctions “as a weapon to turn the Russian populace against its government’s policies.”

DMarket, an NFT and metaverse platform originating from Ukraine, has taken a different stance. The startup says it has “cut all relationships with Russia and Belarus,” now prohibits sign-ups from these countries, and has frozen the assets of “previously registered users” in these countries.

The companies agreed to enforce a blacklist. But they are refusing to ban all Russian accounts, saying that would undermine the crypto community’s libertarian ethos. That doesn’t mean it’s going to be easy for the Kremlin.

ROSS DELSTON: There’s lots of problems here for the Russian government.

ALLYN: That’s Ross Delston.

He’s a crypto expert and former banking regulator. He says crypto is volatile. So parking lots of money in crypto could mean losing money for the Russian government.

But an even bigger issue is Kremlin allies will have trouble making purchases unless they convert crypto into standard currency.

DELSTON: So where are you going to buy this stuff? – for example, food imports. What about spare parts for equipment and electronics that are not made in Russia?

ALLYN: Delston says buying those kinds of things will require currencies like the U.S.

Mykhailo Fedorov, minister of digital transformation of Ukraine, took to Twitter on Sunday to urge the global cryptocurrency exchanges to block addresses of Russian users.

He emphasized that exchanges should freeze not only the addresses tied to Russia and Belarus officially but also to “sabotage ordinary users.”

I’m asking all major crypto exchanges to block addresses of Russian users.

It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.

— Mykhailo Fedorov (@FedorovMykhailo) February 27, 2022

Fedorov subsequently pointed out that some industry-related services have already moved to freeze assets from Russia and Belarus, including the nonfungible token platform DMarket.

“Funds from these accounts could be donated to the war effort.

As such, BestChange, a major crypto exchange aggregator in Russia, has observed a 20% increase in visits following Russia’s invasion of Ukraine, a spokesperson for the firm told Cointelegraph.

Leaving Russia could also be disastrous for major global exchanges like Binance as the Russian market is apparently Binance’s second-biggest market after Turkey in terms of website traffic.

Binance won’t freeze Russians’ Bitcoin

Binance does not plan to freeze assets by Russians because this would contradict cryptocurrency’s main principles of financial freedom, a spokesperson for the firm told Cointelegraph on Monday:

“We are not going to unilaterally freeze millions of innocent users’ accounts.
Crypto is meant to provide greater financial freedom for people across the globe.”

The representative added that the exchange is taking measures to ensure that sanctions are against sanctioned entities in Russia, while “minimizing the impact to innocent users.” “Should the international community widen those sanctions further, we will apply those aggressively as well,” the spokesperson added.

Some crypto executives believe that sanctions against Russia are eventually inevitable. However, they should target only select persons as the United States’ Office of Foreign Assets Control usually does.

“We think that the sanctions will be inevitable by naming new sanctioned persons as US/OFAC has done in the past.

Robin Hoods. Bravo,” Fedorov stated. He also cited the ongoing measures taken by the social media giant Meta regarding Russia’s attack on Ukraine.

Ukrainian-born startup DMarket cuts all relationships with Russia and Belarus due to the invasion of Ukraine.

– The registration on the platform is prohibited for users from Russia and Belarus;

– Accounts of previously registered users from these areas are frozen;

— DMarket (@dmarket) February 27, 2022

Fedorov’s appeals could potentially be catastrophic for the Russian cryptocurrency market, as Russians were estimated to hold more than $200 billion in crypto as of early February.

As the Russian ruble has been plummeting against the United States dollar and the euro, Russians have been increasingly cashing out their bank holdings and apparently considering crypto investments.

Namely, Russians are scrambling to buy Bitcoin and other crypto-assets to escape the collapsing ruble.

The trend is intensifying as sanctions are ramping up, and it is true for the tether-ruble pair too. Namely, Tether offers the useful feature of a 1-to-1 USD peg, especially attractive now that the ruble is collapsing against the dollar.

Moreover, the collapsing ruble, down 41% against the dollar, led to a major milestone for Bitcoin.
The largest crypto surpassed the Russian ruble in market cap.

Crypto and War

After Russia declared the war on Ukraine, global markets were down, and crypto markets crashed 10%. Like in any crisis, only oil, gold and other commodities were up.

However, crypto has rebounded since, as traders speculated on the effect of war on crypto.

He also thanked Nick Clegg, the VP of Global Affairs at Meta, for the steps that the Meta team has taken in removing the accounts linked to Russian propagandists and state media.

There’s no telling how much impact Fedorov’s pleas might have, but it could be massive as data indicates that Russians hold approximately $200 billion in cryptocurrencies.

The potential bans also come as the Russian ruble trades at an historic low versus the U.S. dollar and euro, prompting an increasing number of Russian to turn to cryptocurrencies.

However leaving the Russian market could hit exchanges hard. For example, Binance reports that Russia is its second largest market in terms of website traffic.

That could have been one reason that Binance has announced they will not ban Russian users and accounts.

Leave a Reply

Your email address will not be published.