Key takeaways:
- Jesse Powell, CEO and co-founder of Kraken, has rejected a blanket ban on all Russian crypto transactions
- The CEO wrote that the exchange would unilaterally freeze all accounts only if it was legally required to do so
- Binance’s CEO Changpeng Zhao stated that it is wrong for businesses “to unilaterally decide to freeze populations of users’ assets”
Kraken CEO and co-founder Jesse Powell doesn’t think unilaterally freezing all Russian accounts is appropriate
In light of Russia’s attack on Ukraine, the US and its allies enacted strict economic sanctions in hopes of shortening the conflict. Several Russian banks were cut off from the global SWIFT inter-bank system. At the same time, Visa and Mastercard as well as numerous other businesses decided to limit their services or entirely withdraw from the Russian market.
Responding to Ukraine’s prime minister Mykhailo Fedorov’s request to “block addresses of Russian users,” Kraken CEO and co-founder Jesse Powell listed several reasons why unilaterally banning all Russian accounts might be counterproductive.
Powell wrote that the vast majority of crypto holders are anti-war. He added that cutting their access to crypto would make them more dependent on the Russian government and less likely to support anti-war efforts. The CEO of the San Francisco based cryptocurrency exchange added:
“But as far as sanctioning individuals, we haven’t seen that work very well… once you go to freeze someone’s financial account, they’re no longer able to pay their rent, pay their debts, buy food, and support their family.”
Powell said that Kraken would freeze all accounts if the State Department deems it necessary. “Russians should be aware that such a requirement could be imminent,” he remarked.
Binance CEO thinks there is “much misunderstanding” surrounding crypto and sanctions
Most other major cryptocurrency exchanges are currently taking the same approach as Kraken – banning Russian individuals and businesses that are on the sanctions list, but not indiscriminately freezing accounts of ordinary Russian citizens.
Changpeng Zhao, CEO and founder of the world’s largest cryptocurrency exchange Binance, echoed Powell’s sentiment in a Friday’s blog post.
“We don’t think it is right for businesses or platforms to unilaterally decide to freeze populations of users’ assets. There are normal Russian citizens in London, New York. Should a bank CEO in London have the power to unilaterally decide to freeze those people’s assets?”
Zhao pointed out that crypto is getting a disproportionate amount of attention from the media as a tool Russia could use to bypass economic sanctions. According to his estimates, only 0.3% of the global net worth is in digital assets, far too little to “move the needle” of Russia’s $1.5 trillion GDP. The CEO added that the Russian government doesn’t want to use crypto as it could devalue the ruble. “It’s rumored that the Russian Central Bank is actively trying to block access to crypto, not promoting the use of it,” he wrote.
