Russia, sanctions, crypto– yes, three words that have this week informed one of the most discussed topics in the crypto space.
We know Russia attacked Ukraine and a war is going on. This has in turn attracted tough sanctions from across European nations and the United States.
And in the middle of all these, there’s a simple hypothesis that crypto could provide Russian oligarchs a way to circumvent sanctions. Of course crypto should be able to do this, given characteristics inherent to the burgeoning technology.
But it won’t be won’t be easy and Coinbase CEO Brian Armstrong has shared his views on why not.
Why Coinbase thinks crypto will not be ideal Russian oligarchs
According to Coinbase CEO Brian Armstrong, it’s possible a wealthy Russian close to President Vladimir Putin might try to evade US sanctions by using crypto.
Yet, looking at the prevailing circumstances around Russia, crypto may not be what an oligarch trying to remain anonymous or discrete would look to use in “sneaking” huge amounts of money around.
And it even gets tougher given that the liquidity one might need to facilitate this on the biggest exchanges- most of them available in the US and other major countries looking to enforce sanctions. As such, crypto businesses in these countries will likely follow the law and make it difficult for Russia or the sanctioned individuals.
Sharing his thoughts on this very topic, the Coinbase chief noted:
“Every US company has to follow the law – it doesn’t matter if your company handles dollars, crypto, gold, real estate or even non financial assets. Sanctions laws apply to all US people and businesses. So it would be a mistake to think crypto businesses like Coinbase won’t follow the law. Of course we will.”
He added that screening of customers is part of the law and that global watchlists provide useful information that helps the exchange block flagged individuals, IP addresses, accounts or transactions.
Armstrong then explains why he doesn’t think “there’s a high risk of Russian oligarchs using crypto to avoid sanctions.”
“Because it is an open ledger, trying to sneak lots of money through crypto would be more traceable than using U.S. dollars cash, art, gold, or other assets,” he said.
Blockchain traceability and following the law won’t make it easy for anyone looking to use cryptocurrencies to avoid sanctions.
At a webinar this morning, the National Security Council’s director of cybersecurity Carole House says the scale that Russia would need to circumvent all financial sanctions “would almost certainly render cryptocurrency as an ineffective primary tool for the state.”
— Hannah Lang (@hannahdlang) March 2, 2022
Coinbase won’t block all Russians
Calls to ban all Russians from accessing services on crypto exchanges have also been made, including from officials in Ukraine. But Armstrong says Coinbase won’t take that step.
“We are not preemptively banning all Russians from using Coinbase. We believe everyone deserves access to basic financial services unless the law says otherwise,” he noted.
According to him, doing so will impact people for whom crypto is a buffer in these times when the ruble has deflated massively.
“Many of them [ordinary Russians] likely oppose what their country is doing, and a ban would hurt them, too,” he opined.
But like other regulated companies and businesses, Coinbase follows the law and if the US government asks it to block or ban certain users, the firm will follow the said laws.
Armstrong summarised his view of the whole issue by saying that Coinbase will also work towards helping Ukrainians access the crypto services they need.