As the West and America tighten their economic sanctions on Russia, concerns have emerged about how this will affect the cryptocurrency market.
The country has been largely cut off from the SWIFT international payment system, and businesses in the United States and other Western nations are banned from doing business or transacting with Russian banks and the national wealth fund.
Executives at crypto exchanges have weighed in on the sanctions and their possible effects. Changpeng Zhao, CEO of Binance, went on Twitter to voice his opinion on the subject. He claimed that most banks adhere to sanctions rules and that crypto exchanges like Binance also follow them.
“We are not going to unilaterally freeze millions of innocent users’ accounts,” a spokesperson of Binance, the world’s biggest crypto exchange, said in an emailed statement to Reuters.
Fact:— CZ Binance (@cz_binance) March 3, 2022
Banks (most of them I hope) follow sanction rules.
Crypto exchanges (at least Binance) follow sanction rules.
Crypto exchanges don't sanction Russia normal people.
Crypto exchanges don't follow sanction rules.
Brad Garlinghouse, CEO of Ripple, also slammed the allegations that Russia may use cryptocurrencies to get around economic sanctions. On Twitter, Ripple’s CEO described the procedures for establishing a cryptocurrency exchange, stating that worldwide crypto trading platforms rely on a variety of banking partners that risk losing their licenses if a blocked country or individual breaks through all necessary security measures to conduct transactions on these platforms.
RippleNet, for example, has always been - and remains today - committed to NOT working with sanctioned banks or countries that are restricted counterparties. Ripple and our customers support and enforce OFAC laws and KYC/AML.— Brad Garlinghouse (@bgarlinghouse) March 2, 2022
Garlinghouse said that cryptocurrency exchanges have implemented stringent measures, such as those requiring customers to comply with Know Your Customer and Anti-Money Laundering standards to avoid such undesirable scenarios from occurring.
Garlinghouse’s comments echo those made by Asheesh Birla, Ripple’s General Manager, who argued that because crypto transactions are getting increasingly traceable by governments and software, Russia will be unable to utilize it to get around these financial restrictions.
(thread ahead) In the last few days, we’ve seen some say that Russia could potentially evade sanctions and get around SWIFT using crypto. I outline some of the key arguments refuting this below (and a chart )— Asheesh Birla (@ashgoblue) February 28, 2022
Brian Armstrong, CEO of Coinbase, also articulates this viewpoint and believes that cryptocurrencies are not a way to avoid sanctions. According to him, every United States firm must comply with the law; it makes no difference whether they engage in “dollars, crypto gold, real estate” or any other type of non-financial asset. Sanctions rules are applied equally to all companies and individuals, according to Armstrong.
5/ That being said, we don’t think there’s a high risk of Russian oligarchs using crypto to avoid sanctions. Because it is an open ledger, trying to sneak lots of money through crypto would be more traceable than using U.S. dollars cash, art, gold, or other assets.— Brian Armstrong - barmstrong.eth (@brian_armstrong) March 4, 2022
However, the Coinbase CEO emphasized that Coinbase is not “preemptively” banning all Russian users from using it since everyone deserves access to basic financial services “unless the law says otherwise.” However, Russia is not listed on Coinbase’s supported regions.
A Coinbase representative told Cointelegraph the company is committed to following through with all sanctions that have been imposed, including “blocking accounts and transactions that may involve sanctioned individuals or entities.”
The exchange noted it will not “extrajudicially” implement a blanket ban on all non-sanctioned Coinbase transactions. According to the Coinbase representative, the exchange is taking various measures to remain in compliance with the most recent sanctions.