Crypto exchanges have been a hotly debated point of contention among lawmakers and crypto fanatics alike in recent weeks. Countries around the globe are clamping down on Russia via sanctions led largely by the United States. These crypto exchanges are, of course, being made to comply with these sanctions, blocking certain Russian addresses from making trades on their platforms. Questions are now floating around about whether these exchanges are in fact doing enough to assist in these sanctions. Coinbase (NASDAQ:COIN) CEO Brian Armstrong is firm that his company won’t ban all Russian addresses; however, the company is pleading a case that crypto can be a key tool in enforcing existing sanctions.
No, Coinbase won’t ban any more Russian crypto addresses — at least, not while they don’t have to. Coinbase has already banned over 25,000 Russian accounts from using its services. The platforms are banning these users for having some connection to illicit activity; essentially, the government hands Coinbase and other exchanges a list of people who fall under the sanctions.
Beyond this list, Armstrong is hesitant to institute a blanket ban on Russian users. Some call for this, claiming that crypto is allowing Russians to subvert the sanctions. On Friday, Armstrong refuted these claims in a long thread of tweets. He also says Coinbase will not ban more users unless explicitly required to, saying that “ordinary Russians are using crypto as a lifeline now that their currency has collapsed.”
Armstrong’s comments fall in line with other crypto exchange giants who are speaking out. Binance’s (BNB-USD) founder, Changpeng Zhao, spoke out similarly last week, calling a blanket ban hypocritical to what cryptocurrency stands for.
Coinbase Says Crypto Is a Key to Enforcing Sanctions
While uncomfortable with the idea of fully banning Russian users, Coinbase is sure that crypto is a key to enforcing sanctions from here onward. The company is asserting that the criticisms of crypto as a refuge from sanctions is wrong; rather, he says crypto makes it harder to avoid sanctions.
In a blog post written by Chief Legal Officer Paul Grewal, Coinbase asserts that crypto is naturally better fit for enforcing sanctions than fiat currency. This claim is in direct opposition to those made by crypto bears who purport digital money to be an easy way for Russia to avoid the sanctions it’s facing.
Grewal says in the post that countries have always been able to get around sanctions with fiat. Most popularly, countries will spawn shell companies through which to launder money. Grewal provides the example of Iran, who historically has used shell companies to subvert current sanctions by the U.S.
He contrasts the historical precedent for money laundering and the like with the transparency of crypto; he says this transparency makes the industry more well-equipped for enforcing sanctions. The permanent nature of the blockchain prevents government entities from fudging numbers or laundering money. The transparency of the chain also enforces this, making large movements of currency from a single address quite obvious. He closes out the argument by saying the nascent nature of blockchain makes it already an unlikely venue for sanction evasion.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
