The CEO of the Nasdaq-listed crypto exchange Coinbase says ordinary Russians are using cryptocurrency as a lifeline now that their own currency, the ruble, has collapsed. The executive also does not see a high risk of Russian oligarchs using crypto to avoid sanctions.
Crypto is becoming a lifeline for ordinary Russians
Coinbase CEO Brian Armstrong shared his views on the use of crypto and the politics of his exchange in a series of tweets on Friday as Russia continues to wage war on Ukraine.
Firstly, he emphasized that Coinbase is “not preemptively banning all Russians” from using its platform. “We believe everyone deserves access to basic financial services unless the law says otherwise,” he stressed.
The discussion about banning all Russians started when the Ukrainian Deputy Prime Minister asked all major cryptocurrency exchanges to block the addresses of all Russian users. He tweeted on February 27: “It is crucial to not only freeze addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.
However, several major crypto exchanges quickly denied the request, including Coinbase, Binance, and Kraken.
Noting that Coinbase believes that “everyone deserves access to basic financial services unless otherwise required by law,” Armstrong said on Friday:
Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed. Many of them likely oppose what their country is doing, and a ban would hurt them, too.
The ruble plunged more than 30% this week after a number of countries agreed to impose tough sanctions on Russian entities. On Thursday, Moody’s Investors Service downgraded Russia’s long-term government debt rating from investment grade (Baa3) to junk (B3) – a freefall of six notches.
While the Russian stock market has remained closed, stocks of Russian companies listed on the London Stock Exchange have plummeted. The London bourse has suspended trading of 27 Russian-linked companies, including Russia’s largest bank, Sberbank, whose stock has fallen 99.72% since the beginning of the year.
Coinbase on using crypto to avoid penalties
Regarding sanctions, the CEO of Coinbase stressed that every US company must abide by sanctions laws. “If the US government decides to impose a ban, of course we will follow those laws,” he said.
Armstrong detailed: “This is why we screen people who sign up for our services against global watchlists, and block transactions from IP addresses that might belong to sanctioned individuals or entities, just like any other regulated financial services business.”
However, the executive added:
We don’t think there is a high risk of Russian oligarchs using crypto to avoid sanctions. Because it’s an open ledger, trying to move a lot of money through crypto would be more traceable than using cash, art, gold, or other US dollar assets.
Armstrong proceeded to say that he is not alone in believing that cryptocurrency is an ineffective way to avoid sanctions for Russia.
He quoted Carol House, director of cybersecurity for the National Security Council, who made a similar statement on Wednesday. She says:
The scale that the Russian state would need to successfully circumvent all U.S. and partners’ financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state.
