Crypto exchanges don’t want to blanket exclude Russians

RIO DE JANEIRO, BRAZIL – Some of the world’s largest crypto exchanges – including Malta-based Binance and U.S.-based Kraken and Coinbase – refuse to comply with a blanket exclusion of Russian customers requested by the Ukrainian government, Reuters news agency reports.

The crypto exchanges justify this by saying that excluding an entire nation would counter their ethos of offering payment options without government oversight. Kraken CEO Jesse Powell said he would not back down, calling Bitcoin the “embodiment of libertarian values.”

Binance, the world’s largest crypto exchange, also refused to block all Russian users but says it is blocking the accounts of customers affected by sanctions, according to Reuters: “Crypto should offer greater financial freedom to people around the world.”

According to CryptoCompare, Binance executes over 40% of all crypto trades in rubles. A Binance spokesperson declined to comment on the figure or provide details on sanctioned users it had blocked.

Reuters sees the crypto exchanges’ rejection as indicative of the “ideological divide between the traditional financial sector and the world of cryptocurrencies, whose roots lie in libertarian ideals and distrust of governments.”

For Russian citizens and business people (provided they are not directly sanctioned), however, cryptocurrencies could thus also be, quite unideologically, one of the last remaining options for financial transactions with or in Western countries.

After all, sanctions aimed at cutting off the Russian economy from the global financial system have already forced companies and financial firms to cease doing business in the country. These include energy companies Shell and BP, for example.

However, according to Ross Delston, an American lawyer and former banking regulator quoted by Reuters, it is clear that crypto exchanges are thus providing relief from sanctions.

Security experts tend to doubt whether crypto trading venues thoroughly investigate the identity of their customers. So-called privacy coins are particularly suitable for this purpose.

There are already signs that Russian citizens are not only increasingly exchanging the ruble, which is falling in value, for other currencies, but are also trying to invest savings in cryptocurrencies – trading volumes between the ruble and cryptocurrencies reached 15.3 billion rubles (US$140.7 million) on Monday, a threefold increase from a week earlier, Reuters reported, citing the CryptoCompare service.

On Wednesday, Reuters also reported that the European Commission was looking into whether cryptocurrencies were being used to evade sanctions. The U.S. Treasury Department and the U.K.’s financial regulator had not responded to related inquiries.