Why Cryptocurrency Hasn’t Gone to War With Russia Yet

As Western countries place increasingly strict sanctions on Russian financial institutions, media outlets, and energy suppliers, cryptocurrency companies have faced pressure to shut down Russian accounts and freeze assets. Most crypto exchanges, however, have refused to suspend service to customers in Russia citing concerns that it would remove the only remaining lifeline for innocent Russians caught up in this global conflict.

Coinbase Takes Minimal Action

Brian Armstrong, CEO of Coinbase – one of the largest cryptocurrency exchange platforms on the planet – said on March 4 that his company would not ban all Russians from using their service as many ordinary Russians are “using crypto as a lifeline.”

“In addition, we are not preemptively banning all Russians from using Coinbase. We believe everyone deserves access to basic financial services unless the law says otherwise,” Armstrong said in a Twitter thread on March 4.

Armstrong promised to continue working with law enforcement and world governments on the matter and said that they would only implement sweeping bans on Russian accounts if the United States government chose to impose such a ban.

In a blog post published two days later, Coinbase announced that it was complying with sanctions implemented by the United States government. It meant that the company blocked access to all sanctioned actors. The exchange was able to target individuals already sanctioned by the United States government by checking account applications against lists of sanctioned people and organizations.

The company also announced that it had implemented a screening process to ensure that sanctioned individuals cannot open new accounts and continue trading.

“Today, Coinbase blocks over 25,000 addresses related to Russian individuals or entities we believe to be engaging in illicit activity, many of which we have identified through our own proactive investigations,” the blog post explained.

Kraken and Binance CEOs Express Similar Concerns on Cryptocurrency

Kraken CEO Jesse Powell expressed similar concerns as Armstrong, arguing on February 27 that their exchange cannot simply freeze the accounts of Russian clients “without a legal requirement to do so.”

“Russians should be aware that such a requirement could be imminent,” Powell added in a Twitter thread, responding to a request from Vice Prime Minister of Ukraine, Mykhailo Fedorov, for all major crypto exchange to “block addresses of Russian users.”

In a blog post published on March 4, Binance CEO Changpeng Zhao also said that they would not “unilaterally freeze millions of innocent users’ accounts.”

Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and report on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.