Crypto exchanges oppose demands for a ban on Russia transactions

crypto exchanges come under pressure to block transactions with Russia, since Western politicians fear that cryptocurrencies will offer a back door to move money around the world while trying to exclude Russia from the global financial system.

The trade between the Russian rubles and crypto assets such as Bitcoin and Tether has doubled since the attack on Ukraine and, according to Chainalysis, a crypto research group, reached $ 60 million a day on Monday. This indicates that Russian accounts-which are excluded from sanctions by the established dollar-based financial system-stow funds in crypto or shift abroad.

The Vice Prime Minister of Ukraine, Mykhailo Fedorov, "asked all major crypto exchanges to block addresses of Russian users on Sunday, and said that it was" crucial not only to freeze the addresses of Russian and Belarusian politicians, but also to sabotage normal users ".

Western allies have proven hundreds of people, mainly oligarchs and politicians, which President Vladimir Putin are close, with sanctions, and most major stock exchanges have explained that they will comply with these restrictions.

But some have pushed all Russia -wide bans back.

"to be one-sided to prohibit people access to their crypto would contradict the reason why crypto exists," said Binance, registered on the quay islands, one of the world's greatest crypto exchanges. Rival Okx, based on the Seychelles, also said that he had no plans to block Russian accounts in large quantities.

Western powers have expressed concerns that crypto is used to avoid sanctions. An official of the White House said that the bidges would "continue to combat the abuse of cryptocurrency aggressively, also to avoid US sanctions".

Liz Truss, British Foreign Minister, said on Monday that Great Britain regarding cryptocurrency as a way that could be used to undermine sanctions against Russian banks and global payments.

But for some cryptoma market operators, a ban would mean a profound break with the early pioneers, which designed the idea of the blockchain exactly to circumvent the global banking system.

Jesse Powell, founder of the stock exchange, said that the mission of his company was to "bridge individual people from the old financial system and to bring them into the world of cryptography, where arbitrary lines no longer matter on cards, where they do not have to be afraid of being involved in a broad, indiscriminate confiscation of property". Kraken "cannot freeze the accounts of our Russian customers without legal obligation," he added.

"Bitcoin is the embodiment of libertarian values that significantly favor individualism and human rights."

According to a Chainalysis index,

Russia is one of the 20 countries with the highest acceptance of cryptocurrencies worldwide. Even before the war, Russia ran to Turkey and Ukraine in third place among the countries that sent the largest proportion of crypto transfers abroad.

"Capital flight and tax avoidance could also be part of the history of the introduction of cryptocurrencies in Eastern Europe, especially in Russia and Ukraine," said Chainalysis.

In the past few days,

sanctions of the United States, the United Kingdom and the EU have capped the connections between Russia and the global financial system, blocked the trade with certain banks and frozen the access of some Russian banks, the news system based on the global payments. Trading with the central bank is also severely restricted.

Russia has now introduced capital control checks that ban Russians to transfer foreign currency abroad or to serve new debts in foreign currency outside the country.

The stock exchanges based in the USA and Gemini both stated that they were not active in Russia. However, Coinbase said that "no flat-rate ban would introduce all coinbase transactions with Russian participation [Crypto Wallet] addresses". The FTX, based on the Bahamas, has also undertaken to comply with sanctions against individuals, but not to introduce a ban on the country.

"You have to make sure that you will not be a gateway for sanction circumference and money laundering," said Sam Bankman-Fried, founder of FTX.

Many crypto exchanges operate off offshore jurisdictions or are not regulated beyond their obligation to comply with the money laundering laws.

investors can convert their rubles into crypto, which can then be traded on non -sanctioned companies. The Financial Stability Board, a global committee of supervisory authorities and central bankers, has warned that digital assets could be used to circumvent sanctions.

Nevertheless, lawyers point out that crypto exchanges are subject to a significant legal risk, since transactions recorded on blockchains are public and unchangeable.

However,

"Crypto operators are exposed to a higher risk than those in the traditional financial services areas, because they will be on the hook for what they have to know about the ownership of the assets they have managed", Jason Hungerford, a partner at the Law company Mayer Brown in London.

But the role of crypto as a payment system for potentially illegal transactions from Russia can have long -term consequences.

"The governments will probably deal with the regulation of crypto with increasing urgency," said Paul Donovan, chief economist at UBS Global Wealth Management.