Coinbase will not ban all cryptocurrency transactions in Russia

Some Russians are using digital tokens as a lifeline after their currency’s collapse, chief executive Brian Armstrong says

Coinbase will keep working to enable cryptocurrency services for the people of Ukraine who are in need of help. Bloomberg

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Digital asset trading platform Coinbase will not ban all cryptocurrency transactions in Russia as people affected within the Ukraine-Russia conflict zones are increasingly turning towards these tokens to keep their money accessible, chief executive Brian Armstrong said.

“We are not pre-emptively banning all Russians from using Coinbase. We believe everyone deserves access to basic financial services unless the law says otherwise,” Mr Armstrong said on Twitter on Friday.

“Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed.”

Ukraine, which has received donations worth $33.8 million in digital currency since the start of Russia’s military offensive, has requested cryptocurrency exchanges such as Coinbase and Binance to impose a blanket ban on Russian users.

Investors at large are viewing cryptocurrencies as a good place to store assets amid volatility created by the Russia-Ukraine crisis.

The daily volume of Bitcoin trading in both the rouble and the Ukrainian hryvnia has risen to about 270 per cent, according to research from Bankless Times.

After initially falling to about $34,000 following Russia’s advance into Ukraine, Bitcoin has surged about 25 per cent since February 24. It was trading at $41,410 at 10.54pm UAE time on Friday.

“Bitcoin is giving back the early week gains as it becomes clearer by the day that it won’t be a hassle-free safe haven to investors as the western forces are going after the coin to impose strict regulations to prevent Russians from going around the sanctions that are imposed to them,” Ipek Ozkardeskaya, senior analyst at Swissquote, said on Friday.

“The price of a coin is headed towards the $40,000 mark and it is likely we [will] start seeing Bitcoin trade parallel to the risk assets yet again.”

Ether, the second-largest cryptocurrency, was trading at $2,725 at 10.55pm UAE time. It has surged 1.4 per cent in the past five days.

Many Russians probably oppose what their country is doing and a ban on cryptocurrencies would hurt them too, Mr Armstrong said.

“That said, if the US government decides to impose a ban, we will, of course, follow those laws,” he tweeted.

Meanwhile, Coinbase will keep working to enable cryptocurrency services for the people of Ukraine who are in need of help, Mr Armstrong said.

He ruled out the possibility of Russian oligarchs using cryptocurrencies to avoid sanctions.

“Because it is an open ledger, trying to sneak lots of money through crypto would be more traceable than using US dollars cash, art, gold or other assets,” Mr Armstrong said.

Unlike fiat currencies, which must be moved through various third-party institutions, cryptocurrencies can be transferred from one user to another, dodging government sanctions and other restrictions.

“It would be a mistake to think crypto businesses like Coinbase won’t follow the law. Of course, we will,” he said.

Coinbase screens people who sign up for services against global watch lists and as is the case with any other regulated financial services business, blocks transactions from IP addresses that might belong to people or entities under sanctions, Mr Armstrong said.

Russia’s economy has taken a hit after the US and its allies took punitive actions against Moscow after its decision to undertake a military operation in Ukraine.

Russian companies and oligarchs in President Vladimir Putin’s inner circle have their assets frozen while European countries have closed their airspace to Russia’s private and commercial aircraft.

Some Russian banks have also been barred from the Swift global financial network while the US Treasury has prohibited Americans from engaging in transactions with the Bank of Russia, the Russian Direct Investment Fund and the country’s Ministry of Finance.