Cryptocurrency exchanges fell into the global spotlight following international sanctions and the ongoing Russia-Ukraine crisis. Multiple national governments have called out for a blanket ban over Russian crypto transactions. However, leading crypto exchanges are unwilling to implement them, with justified reasons as well.
International Political Standpoint
Global exchanges facilitating digital asset transactions are being strongly coerced into adhering to US and NATO’s sanctions and prohibiting crypto transactions throughout Russia. The western narrative suggests that permitting transactions through digital assets would allow Russia to bypass the imposed restraints from the global banking system SWIFT. Incidentally, the Biden-led US government was among the first ones urging the ban, and now Ukraine is also petitioning for the same.
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Crypto Exchange Perspective
A majority of the leading global digital assets exchanges are not disinclining to the rising global petition for restricting Russian crypto transactions. They are willing to block Russian politicians, oligarchs, and individuals specified. However, blacklisting the entire Russian population will have ramifications and loss of global business opportunities. In addition, the petition urges exchanges to undergo a complete 180-turn from what cryptocurrencies were all supposed to be about- relieving the world from the shackles of the contemporary financial system.
Noted blockchain pioneer and PayBito CEO Raj Chowdhury expressed his opinion regarding the current situation, stating, “The current humanitarian crisis surrounding the Russia-Ukraine conflict is bridging people together with over $50 million worth of crypto donations pouring from all over the world. Western petitions to block Russian crypto transactions are not possible, mainly due to the fact that the industry is built upon decentralization.”
Similar stances have also been taken up by leading crypto exchanges including Binance, Kraken, FTX, and Coinbase. In response to a plea from the Vice PM of Ukraine, the exchanges revealed their course of action, screening and restricting users blacklisted by the sanctions rather than blocking an entire nation. Cryptocurrencies were built for the very purpose of enabling payment transfer without interference from intermediaries, including governments.
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The Implausibility of a Crypto Ban for Russia
There are a few hundred names on the sanctions list prepared by the West. There is a much larger number of crypto traders across the nation. The exchanges are willing to prevent transactions, both inbound and outbound, from the names mentioned in the list, mostly politicians. However, rejecting an entire nation based upon the acts of a few is discriminatory.
“I am deeply grieved by the war news and cannot fathom what the Ukrainian people are going through. But, the underlying blockchain architecture beneath crypto exchanges prevents central regulation. A legal requirement changes things, but till then, freezing digital assets of an entire nation is not viable,” mentioned Chowdhury of the US-based crypto exchange PayBito.
Binance founder Changpeng Zhao offered similar views, expressing the exchange’s compliance to curb listed individuals instead of a complete ban, adding:
“We are not in a position to sanction, like, populations of people. There are a few hundred individuals that are on the international sanctions list in Russia, mostly politicians, and we follow that very, very strictly.”
Crypto exchanges were developed to introduce the concept of cryptocurrencies to the world and facilitate transactions without interference. Digital assets bridge individuals out of traditional payment processing services as well as conventional cross-border banking systems like SWIFT. A nationwide blanket ban dilutes the very ethos behind its creation- building an ecosystem for eliminating financial constraints across political borders.