When Ukraine requested crypto exchanges to freeze Russian accounts, many respond with defiant statements citing libertarian ideals. However, there are some that complied with the call for sanctions to put pressure on the Russian administration.
Crypto Exchanges and Storage of Wealth
The responses from crypto exchanges point at bigger challenges faced by the crypto community during the geopolitical and humanitarian crises. This is why the Russia-Ukraine war is now being considered a defining moment for crypto coins, such as Ethereum (ETH)Bitcoin (BTC), and Cardano (ADA). Let’s take a closer look.
When you check the Ukrainian side, cryptocurrencies have lived to their reputation of helping to move money globally effectively. For example, over USD 54 million have been raised via crypto donations so far.
However, the same cannot be said of the Russian side. The expected reality of borderless money has collided with the reality of international sanctions precipitated by the conflict with Ukraine. The questions being asked at this point are, “can the crypto market fuel war of aggression?” and “is it possible for Russian oligarchs to preserve their wealth through crypto markets?”
Both exchanges and crypto enthusiasts have adopted libertarian principles they believe are ingrained in cryptos. They had to deal with the question of how much they targeted to embrace the technology, which is considered of little value apart from money laundering and investment hedging while requiring huge quantities of energy.
Cryptos Design, Respect for the Rule of Law, and International Sanctions
Another thing that crypto enthusiasts had to come to terms with is that cryptocurrencies are getting into big business undertakings, meaning that they must agree to take sanctions where necessary.
According to Ryan Selkis, the Chief Executive Officer of Messari, a respected crypto research firm, many pro-crypto personalities are pushing back against the ideas of dragnet surveillance and extrajudicial seizures. However, he continues to say that they do not operate in a vacuum and are ready to respect the rule of law.
As Romain Chiaramonte explains, cryptos have moved from nascent technology and molted into a mainstream industry that attracts ads from million-dollar investments. Blockchain technology is pegged on computing power to develop unbreakable databases/ledgers that can easily track who owns what without involving a centralized authority. So, how much of an anti-authority streak is a reality in the crypto world?
When the sanctions against Russia started, Binance was the first major crypto exchange to issue a statement. The exchange’s spokesman explained to CNBC that limiting Russians from accessing cryptos would negate the very reason why cryptocurrencies were designed.
What about CZ from Binance?
Interestingly, Binance appeared to have changed its focus when the CEO, Changpeng Zhao, about four days later, said in a lengthy blog post that the company would deploy the same sanctions as banks. He also noted the company’s fundraising efforts, where they donated USD 10 million for humanitarian aid.
“Why won’t Binance sanction Russian users?” Zhao answered that they lack the authority to do so. Like Binance, other exchanges also came out to explain they would comply with new sanctions. Indeed, the Treasury Department of the United States has not come out to accuse any exchange of non-compliance.202203:24
Experts are indicating that President Vladimir will not be able to use digital currencies to sanctions because the crypto market is still not big enough and exchanges are dedicated to help address money laundering.
Brett Harrison, the President of the FXT exchange, explained that they have sophisticated tools to help them know those who are sanctioned, the sanctioned countries, and track crypto/fiat deposits or withdrawals. He added by indicating they would block the sanctioned persons just like exchanges have been doing since their inception.
So, is Cryptocurrency Untouchable?
The truth about cryptocurrencies is that they are different from what early users thought they would be. Early adopters believed that cryptos were completely out of reach, and governments could not have any access to them.
Timothy May, who wrote “The Crypto Anarchist Manifesto” in 1988, about 20 years before the launch of the first crypto coin, pointed out that criminal elements would be very active in CryptoNet. He continued to say that this would not stop the spread of crypto anarchy.
Romain Chiaramonte suggests that the idea of being unreachable might have fanned the allure of crypto coins, but a different picture is presenting itself now. From the EU to the US, almost every jurisdiction is working on some sort of regulations for the crypto community and operations.
According to Chainanalysiscrypto-related crime reached a record high, with illegal addresses receiving about USD 14 billion in cryptos in 2021. However, this is only 0.15% of the total transactions.