As the war in Ukraine rages on, Russia is facing crippling sanctions. The Ukrainian government wants these sanctions to extend to crypto.

Ukraine is calling the largest crypto exchange to block all crypto addresses in Russia and Belarus. Moreover, they want to freeze the assets of both politicians and citizens.

Ukraine’s Vice Prime Minister and Minister of Digital Transformation Mykhailo Fedorov called for the unprecedented move.

It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.

Hours later, Fedorov said that at least one platform responded to the call.

Received breaking news. @dmarket, a platform for trading NFT & In-game Metaverse items, decided to freeze the accounts of users from the Russian Federation and Belarus. Funds from these accounts could be donated to the war effort. Nowadays Robin Hoods. Bravo.

That was not the first crypto boycott as a result of the Russian invasion of Ukraine. Earlier, the Ethereum mining operation Flexpool announced halting all services in Russia.

We apologize to our Russian miners; many of you do not support the war. However, it is you who sustain your nation. Without the people, Russia cannot operate.

Image Source: Unsplash

Binance Not Ready To Freeze Accounts – Yet

Calls for freezing crypto funds understandably caused some division in the crypto community. While the vast majority of crypto supporters unequivocally condemn the invasion, they don’t like the idea of targeting individual users. As many say, that is exactly what crypto should prevent.

Still, so far, most major exchanges are not prepared to take such drastic measures either. Binance doesn’t like the idea of targeting ordinary users for now.

We are not going to unilaterally freeze millions of innocent users’ accounts. Crypto is meant to provide greater financial freedom for people across the globe. To unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists.

Binance said that it will work to target those that may use crypto for malicious ends. However, they say that they want to minimize consequences to innocent people, including ordinary Russian citizens.

However, we are taking the steps necessary to ensure we take action against those that have had sanctions levied against them while minimizing impact to innocent users.

Still, they are watching what the international community is doing, and may follow with more severe boycotts.

Should the international community widen those sanctions further, we will apply those aggressively as well.

Kraken Won’t Freeze Accounts Unless Forced To

Jesse Powell, CEO of Kraken, expressed a more hardline stance. Kraken will not freeze accounts of its users unless forced to by law.

I understand the rationale for this request but, despite my deep respect for the Ukrainian people, Kraken cannot freeze the accounts of our Russian clients without a legal requirement to do so.

Furthermore, he warned their Russian clients that they may want to move their money out of the exchange.

That requirement could come from your own government, as we have seen in Canada, in response to protests, bank runs and attempts to flee the country. It could come from foreign states, like the US, as a weapon to turn the Russian populace against its government’s policies.

For him, locking ordinary people out of their accounts and seizing their assets is contrary to what crypto holders stand for.

I would guess that the vast majority of crypto holders on Kraken are anti-war. Bitcoin is the embodiment of libertarian values, which strongly favor individualism and human rights. In Canada, crypto was the only financial rail left for those who opposed the regime.

Lastly, he added that if they had to close the accounts of citizens of every country that wages unjust wars, they would have to target U.S. accounts first.

The Ruble is Down, BitCoin is Up

Crypto sanctions could have a severe impact on Russian citizens, as the economy is devastated by regular sanctions. Among other sanctions, Russia was kicked out of the SWIFT payment system. Most recently, European Union banned transactions with the Russian central bank.

That is why Ruble denominated Bitcoin trading hit a 9-month high. Namely, Russians are scrambling to buy Bitcoin and other crypto-assets to escape the collapsing ruble.

The trend is intensifying as sanctions are ramping up, and it is true for the tether-ruble pair too. Namely, Tether offers the useful feature of a 1-to-1 USD peg, especially attractive now that the ruble is collapsing against the dollar.

Moreover, the collapsing ruble, down 41% against the dollar, led to a major milestone for Bitcoin. The largest crypto surpassed the Russian ruble in market cap.

Crypto and War

After Russia declared the war on Ukraine, global markets were down, and crypto markets crashed 10%. Like in any crisis, only oil, gold and other commodities were up.

However, crypto has rebounded since, as traders speculated on the effect of war on crypto. Bitcoin back above $40,000 after dropping as low as $35,000 at the start of the war.

The war was a spotlight for crypto use cases as well. The Ukrainian Military raised $4 million from crowdfunding in crypto since the start of the invasion.