One Ukrainian official called for sanctions to be imposed on Russian cryptocurrency holdings, as the West continues to impose additional sanctions against Russian banks after Russia’s invasion.
Mykhailo Fedorov (Ukraine’s Minister for Digital Transformation) took to Twitter Sunday to ask the global cryptocurrency exchanges not to allow Russian users to access their addresses.
He stressed that exchanges should not only freeze addresses linked to Russia or Belarus, but also “sabotage ordinary user.”
I am asking all major crypto exchanges for their cooperation in blocking Russian addresses. It is crucial that you not only freeze addresses associated with Russian and Belarusian politicians but also ordinary users.
— Mykhailo Fedorov, @FedorovMykhailo February 27, 2022
Fedorov pointed out that several industry-related services had already taken steps to freeze assets from Russia or Belarus, including DMarket, a nonfungible token marketplace.
“Funds from these accounts can be donated to war efforts. Nowadays Robin Hoods. Bravo,” Fedorov said. Fedorov also mentioned the ongoing actions taken by Meta, the social media giant, regarding Russia’s attack against Ukraine.
DMarket, a Ukrainian-born startup, has cut all relations with Russia and Belarus following the invasion of Ukraine. Users from Russia and Belarus are not allowed to register on the platform; accounts of registered users from these countries have been frozen.
— DMarket (@dmarket), February 27, 2022
Fedorov’s appeals may prove to be a disaster for Russia’s cryptocurrency market. As of February, Russians had more than $200 billion worth of crypto.
The Russian ruble has been falling against the U.S. Dollar and the Euro, and Russians are now cashing out more of their bank accounts and considering crypto investments. According to a spokesperson from BestChange, the largest Russian crypto exchange aggregator, there has been a 20% rise in visits since Russia invaded Ukraine.
Binance could be hit hard if Russia leaves, as Russia is Binance’s second largest market in terms of website traffic.
Binance will not freeze Russians’ Bitcoin
Binance has no plans to freeze assets of Russians, according to a spokesperson.
“We will not unilaterally freeze millions innocent users’ accounts. Crypto is intended to give people around the world greater financial freedom.
According to the representative, the exchange is taking steps to ensure sanctions are not applied to sanctioned Russian entities while “minimizing the impact on innocent users.” The spokesperson said that if the international community increases those sanctions, they will also apply them aggressively.
Many crypto executives believe that sanctions against Russia will eventually become inevitable. They should not target everyone, as the United States’ Office of Foreign Assets Control does.
“We believe that sanctions will be inevitable by naming new sanctioned individuals, as US/OFAC did in the past. Jukka Blomberg, chief marketing officer at LocalBitcoins, stated that banning all crypto firms from providing services to ordinary Russians would be absurd and cause more harm than good.
Jesse Powell, Kraken’s CEO, stated that Kraken will not be allowed to freeze accounts of Russian clients without a legal requirement. He said that Russians should be aware of the possibility of such a requirement. Powell had previously advised Kraken users that they move their crypto assets from the exchanges. He was referring to Canada’s Emergency Act, which has frozen the crypto of dissidents.
1/6 While I understand the reasoning behind this request, @krakenfx can’t freeze accounts of Russian clients without a legal obligation to do so. Russians need to be aware of the possibility that such a requirement may be forthcoming. #NYKNYC https://t.co/bMRrJzgF8N
— Jesse Powell (@jespow), February 28, 2022
This act forced crypto companies to block Bitcoin (BTC), wallets that were related to anti-vaccine protests at local hospitals in mid-February.
Although it is not yet clear if other crypto exchanges will freeze Russia’s crypto assets as well, many crypto companies have actively supported the soldiers and refugees from Ukraine.
Binance has launched the Ukraine Emergency Relief Fund, which provides emergency relief via crypto crowdfunding. To help Ukraine’s humanitarian crisis, the crypto exchange donated $10 million.
#Binance will donate $10 million to the humanitarian crisis in Ukraine. Our focus is on providing support on the ground through charity and collaboration. @BinanceBCF has also created the Ukraine Emergency Relief Fund, which provides emergency relief via crypto crowdfunding.
— Binance (@binance), February 27, 2022
Similar: Ukraine accepts Bitcoin, Ethereum and USDT donations in the midst of ongoing war
CoinGate, a crypto payment processor, has launched a similar initiative. It opened a special fundraising account for the Ukrainian Armed Forces. This fundraising campaign allows users to donate in more 70 cryptocurrencies. The funds will go directly to the National Bank of Ukraine.
@CoinGatecom, a payment processor, has created a portal for Ukraine to help with #Litecoin donations. Beware of copycat websites. https://t.co/My7sZbwBeG https://t.co/pNgLCyf7VX
— Litecoin (@litecoin), February 27, 2022
Local crypto exchanges are also quick to respond, with the Ukrainian Kuna exchange launching a cryptocurrency fund last Thursday to support charities that aid the army and state in resisting the Russian invasion.
Cointelegraph estimates that Ukraine has raised more than $23 million in crypto funds since the launch various donation campaigns.
Russia’s Prosecutor General’s Office warned Russians on Sunday that any assistance to a foreign nation during the “special operation” to protect the DPR or LPR would be considered treason to Motherland. This offense can result in a sentence of up to 20 years imprisonment.
Additional reporting by Zhiyuan Son, Cointelegraph’s writer.