Jesse Powell, the CEO and co-founder of Kraken, has argued against a blanket ban on all cryptocurrency transactions in Russia.
According to the CEO, the exchange would unilaterally freeze all accounts only if needed by law.
Changpeng Zhao, CEO of Binance, argued that organizations should not “unilaterally decide to freeze populations of customers’ funds.”
Jesse Powell, Kraken’s CEO and co-founder, believes that arbitrarily blocking all Russian accounts is not appropriate.
In response to Russia’s aggression against Ukraine, the US and its allies imposed severe economic sanctions in the goal of resolving the war. Several Russian banks have been disconnected from the worldwide SWIFT interbank messaging system. Simultaneously, Visa and Mastercard, as well as a slew of other corporations, opted to curtail or completely exit from the Russian market.
In response to Ukraine’s Prime Minister Mykhailo Fedorov’s proposal to “limit Russian user addresses,” Kraken CEO and co-founder Jesse Powell cited many reasons why arbitrarily banning all Russian accounts would be futile.
1/6 I understand the reasoning behind this request, but despite my deep admiration for the Ukrainian people, @krakenfx is unable to freeze the accounts of our Russian clients absent a legal necessity to do so.
Russians should be cognizant of the possibility of such a demand. https://t.co/bMRrJzgF8N #NYKNYC
February 28, 2022 — Jesse Powell (@jespow)
Powell stated that the overwhelming majority of cryptocurrency owners are anti-war. He noted that depriving them of encryption would increase their reliance on the Russian government and make them less inclined to support anti-war initiatives. Additionally, the CEO of the bitcoin exchange situated in San Francisco stated:
“However, when it comes to punishing individuals, we haven’t seen it work very well… When you freeze someone’s financial account, they are unable to pay rent, debts, purchase food, or feed their family.”
Powell stated that if the State Department thinks it necessary, Kraken will freeze all accounts. “Russians should be informed that such a requirement is possible in the near future,” he observed.
According to Binance’s CEO, there is “much misunderstanding” regarding cryptocurrency and sanctions.
The majority of other large cryptocurrency exchanges are presently following Kraken’s lead in barring Russian persons and firms on the sanctions list but refraining from arbitrarily freezing accounts of ordinary Russian nationals.
Changpeng Zhao, CEO and founder of Binance, reiterated Powell’s sentiments in a Friday blog post.
“We believe that firms and platforms should not be able to unilaterally decide to freeze user populations’ assets. In London and New York, there are ordinary Russian citizens. Should a London-based bank CEO have the unilateral authority to freeze those people’s assets?”
Zhao noted that cryptocurrency is receiving an abnormal amount of media attention as a potential tool for Russia to circumvent economic sanctions. According to his estimations, digital assets account for only 0.3 percent of world net worth, much too low to “move the needle” on Russia’s $1.5 trillion GDP. The CEO noted that the Russian government is opposed to cryptocurrency adoption because it risks devaluing the ruble. “It is rumored that the Russian Central Bank is actively attempting to restrict access to cryptocurrency, rather than encouraging its use,” he said.
David is a crypto enthusiast and personal finance guru. He has authored various writings across a variety of media. He is constantly on the lookout for new opportunities, which is how he discovered blockchain in the first place.