Russia-Ukraine crisis: Why crypto exchanges should remain neutral

Key Takeaways

• Warren wants regulations on digital assets amid ongoing sanctions on Russia.
• Digital exchanges must remain neutral to uphold the founding ideology of crypto.
• Russian ban will be unfair to average Russians, says Kraken CEO

LAGOS (CoinChapter.com) — Pressure continues to mount on the cryptocurrency industry to join the global effort to sanction Russia after it invaded Ukraine.

World leaders and several financial authorities have expressed concern that Russia could utilize cryptocurrency to lessen the impact of the sanctions on its economy.

Former presidential candidate Hillary Clinton thinks crypto exchanges should ban Russian users.

This was just as United States Senator, Elizabeth Warren, called on financial regulators to clamp down on crypto exchange to prevent Russia from using it to undermine the sanctions.

Criminals can use cryptocurrency to move money in the shadows, opening a door for Putin & his cronies to evade economic sanctions. I want answers from @USTreasury on how they'll ensure crypto doesn’t undermine our response to Russia's invasion of Ukraine.https://t.co/bXcuM06Ovx

— Elizabeth Warren (@SenWarren) March 3, 2022

Most parts of the crypto industry widely condemned the statement from the Massachusetts senator. But other prominent individuals, including Mykhailo Fedorov, Ukraine’s vice-Prime Minister, further urged crypto exchanges to ban Russian users.

“It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians but also to sabotage ordinary users,” Fedorov said.

Anti-money laundering experts and European regulators have also argued that cryptocurrencies can weaken Western sanctions on Russia.

These calls by behemoths in the political and financial sectors have mixed reactions from crypto exchanges. While several digital platforms have agreed to block Russian users, others have rejected the demand to sanction users.

Why Crypto Exchanges Should Be Neutral In The Ukraine Crisis

While the world expresses dismay at the decision of President Vladimir Putin to invade Ukraine, the crypto industry must remain neutral in this conflict.

The first reason why crypto exchange must remain neutral in the Russia-Ukraine war is to uphold the ideology behind cryptocurrencies. These assets were was created, so people don’t have to rely on government or financial institutions to make financial transactions.

Hence, if crypto exchanges heed the demands to ban Russian users, it would contradict the essence of establishing digital currency. Crypto exchanges should remain neutral and continue to empower the people against government oppression and rules.

Crypto has become a new haven for many Russians after the Rouble plummeted due to western sanctions. Additionally, if crypto exchanges decide to bar users, it will negatively impact users.

Notably, entrepreneurs and business owners across Ukraine will not protect their businesses amid an economic meltdown. Digital currency, on the other hand, will give them the ability to safeguard their businesses.

Coinbase CEO Brian Armstrong, in a statement, noted that imposing sanctions on users will affect the livelihood of users. He explained that everyone deserves access to basic financial services until the law says differently.

8/ Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed. Many of them likely oppose what their country is doing, and a ban would hurt them, too. That said, if the US government decides to impose a ban, we will of course follow those laws.

— Brian Armstrong – barmstrong.eth (@brian_armstrong) March 4, 2022

Mixed Reactions Trail Calls To Ban Crypto

Furthermore, while several crypto exchanges have announced they wouldn’t block Russian users, others have done otherwise.

Gopax, one of the major exchanges in South Korea, blocked Russian IP addresses publicly. Similarly, Upbit also announced that it would refuse withdrawal requests from Russian IP addresses.

Furthermore, Bithumb, Korbit, among others, disclosed that they would impose limitations on Russian addresses. Michael Chobanian, the founder of a Ukrainian crypto exchange Kuna, announced that Russian users have already been blocked from the exchange.

Meanwhile, Binance rejected calls to ban Russian users from using their platforms. This was just as Kraken and FTX noted that they wouldn’t impose a total ban on Russian users.

According to Kraken CEO and co-founder Jesse Powell, such a move will be unfair to average Russians, who might not support the country’s invasion of Ukraine.

5/6 Sometimes the hardest thing about having power is knowing when not to use it. Our mission is better served by focusing on individual needs above those of any government or political faction. The People's Money is an exit strategy for humans, a weapon for peace, not for war.

— Jesse Powell (@jespow) February 28, 2022

“We are not going to unilaterally freeze millions of innocent users’ accounts,” Binance spokesperson said.

Additionally, it is worth noting that crypto transactions involving the Russian ruble (RUB) on Binance surged this week.