Crypto Exchanges considering Freezing Russian Assets

Last updated: Mar 30, 2023
4 Min Read
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With sanctions against Russia becoming increasingly harsh a call has gone out to the crypto exchanges from one Ukrainian official asking to have Russian assets frozen.

Ukraine’s Minister of Digital Transformation, Mykhailo Fedorov, took to Twitter on Sunday to ask that crypto exchanges block all Russian addresses. Not just the addresses tied to Russian politicians and officials, but also the addresses of ordinary Russians, in order to sabotage the economy of the entire country.

Ukrainian Tweet

Fedorov went on to highlight the services in the crypto ecosystem that are already blocking Russia users. 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. Officially the exchange says that a ban of that nature would go against the company’s main principle of financial freedom.

"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."

At the same time the Binance spokesperson did say that Binance would be taking action to sanction the accounts of any sanctioned individual or organization, while leaving accounts of innocent users untouched.

Both LocalBitcoins and Kraken made statements indicating that they would comply with legal sanctions, but that a full scale ban of Russian users was not in consideration.

LocalBitcoins marketing officer Jukka Blomberg had this to say:

“We think that the sanctions will be inevitable by naming new sanctioned persons as US/OFAC has done in the past. However, banning all crypto companies from offering services to ordinary Russians, would not make sense and would cause more harm for everyday people than good.”

Kraken CEO Jesse Powell has said his exchange would need a legal requirement to freeze assets, adding that such a requirement could be forthcoming.

Kraken Tweet

On another front many exchanges are providing support to the humanitarian crisis in Ukraine. Binance has established the Ukraine Emergency Relief Fund to provide emergency relief through crowdfunding and has also donated $10 million to the efforts.

Payment processor CoinGate has begun a similar initiative to support the Ukranian Armed Forces.

According to estimations, Ukraine has raised over $23 million worth in crypto since the launch of various donation campaigns.
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