Most crypto exchanges reluctant to freeze Russian accounts, say that goes against the whole idea behind crypto
The price of Bitcoin has been recovering in recent days, buoyed by several factors stemming from the ongoing conflict between Russia and Ukraine. On one hand, the recessionary impact on the world economy that the Russian invasion and subsequent sanctions could bring has diminished the case for Federal Reserve rate hikes, while the freeze on Russian Central Bank's reserves could potentially force many citizens and businesses there to turn to crypto in one form or another as an alternative.
Those expectations that pushed the price of Bitcoin to today's US$46,500 level, compared to US$37,300 on the day before the conflict started, are not without merit. Ukraine saw millions collected in crypto account donations and even announced that each Russian soldier who voluntarily gives up arms will get five million rubles in crypto, or the equivalent of about US$50,000 before the ruble crashed on Monday. Russians, on the other hand, are piling into crypto as an alternative to the devaluating local currency. The world's largest exchange Binance, for instance, saw an influx of transactions from Russian accounts as they tried to secure access to stablecoins like Tether that are not only pegged to the dollar, but are also harder to trace.
It seems that crypto is one of the very few areas that Russian citizens' finances won't be hard hit at, too. Binance, whose CEO is the richest person in crypto, said the exchange won't be suspending Russian digital assets there, despite Ukraine Deputy Prime Minister Mykhailo Federov's pleas. Asked to comment on the Russian account freeze pressure, a Binance spokesperson said:
To unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists... [we can't] unilaterally freeze millions of innocent users’ accounts.
The Coinbase exchange, on the other hand, is keeping its options open and adds that Russians can do with their crypto whatever they like as long as an account freeze isn't required by law enforcement for those who have been sanctioned.
At this time, we will not institute a blanket ban on all Coinbase transactions involving Russian addresses. Instead, we will continue to implement all sanctions that have been imposed, including blocking accounts and transactions that may involve sanctioned individuals or entities. Our mission is to increase economic freedom in the world. 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.
The libertarian-leaning CEO of the Kraken exchange was even more straightforward when arguing why they won't suspend Russian crypto accounts, although he warned that a government mandate to do so may be imminent.
Besides, if we were going to voluntarily freeze financial accounts of residents of countries unjustly attacking and provoking violence around the world, step 1 would be to freeze all US accounts. As a practical matter, that's not really a viable business option for us.
All in all, only Ukraine-based exchanges are freezing Russian-owned crypto accounts for now, yet the situations is in flux, and blanket crypto sanctions could be coming at any moment, forcing the exchanges to comply despite the whole concept behind cryptom which could set another dangerous precedent.
Don’t worry. Fraudulent crypto exchanges like Bitfinex don’t ask for identification. Just use Bitfinex or Tether fraud enabled exchanges with pretend KYC/AML compliance. You can even use Bitfinex without even providing your name!— Bitfinex’ed ???? (@Bitfinexed) February 28, 2022
Bobs your uncle! pic.twitter.com/NY5uSta4O3
1/6 I understand the rationale for this request but, despite my deep respect for the Ukrainian people, @krakenfx cannot freeze the accounts of our Russian clients without a legal requirement to do so.— Jesse Powell (@jespow) February 28, 2022
Russians should be aware that such a requirement could be imminent. #NYKNYC https://t.co/bMRrJzgF8N