Coinbase Says No to Freezing Russian Crypto Accounts

Key Insights:

• Coinbase rejects a call to impose a blanket ban on Russian accounts.
• Other exchanges to reject the Ukrainian government include Binance and Kraken
• Exchanges state that they will block accounts for legal reasons and accounts and transactions involving sanctioned persons and entities

Following hefty sanctions on Russia in recent days, the focus has shifted to ensuring that Russia does not evade imposed sanctions. The blocking of certain Russian banks from the SWIFT payment system has raised concerns that Russia could circumvent the move by accessing the crypto market.

Over the weekend, the Ukrainian government offered bounties for information about crypto-wallets of Russian and Belarusian politicians and their surroundings. Since then, the Ukrainian government took one step further, calling on exchanges to freeze Russian crypto accounts.

Coinbase Says No

Overnight, Coinbase announced it would not ban all transactions linked to Russian addresses. While Coinbase is available in more than 100 countries, Coinbase does not provide services in Russia.

According to the report, Coinbase has stated that a blanket ban would “punish ordinary Russian citizens who are enduring historic currency destabilization as a result of their government’s aggression against a democratic neighbor.” Coinbase did state, however, that it will follow sanction requirements and block “accounts and transactions that may involve sanctioned individuals or entities.”

Coinbase is not the first exchange to decline the Ukrainian government’s request for a blanket ban.

Overnight, Binance reportedly joined a growing list of exchanges to reject Ukraine’s call to freeze Russian accounts. Binance stated that “We are not going to unilaterally freeze millions of innocent users’ accounts. Crypto is meant to provide greater financial freedom to people across the globe.”

Kraken, another major crypto exchange, also stated that it would not freeze Russian accounts. Kraken CEO Jesse Powell did say that the platform would block accounts in response to a legal requirement.

Onus Falls on Governments to Identify Key Crypto Accounts

Failure to convince a blanket ban on Russian crypto accounts places the onus on governments to identify politically linked accounts.

On Friday, ECB President Lagarde had made it clear that the ECB would “make sure that criminal activity is actually pursued and properly dealt with.” Lagarde responded to a question on Russia evading sanctions via the crypto market.

Overnight, Israeli authorities seized 30 crypto wallets linked to 12 accounts on suspicion of funding Hamas. Western governments could follow a similar course of action to block Russian attempts to evade sanctions.