International sanctions against Russia seemingly destroy the idea of borderless and free money which is basically a foundation to cryptocurrency as a whole.
It sounds a little bit too harsh, I know. But it is true. At the very moment when Western world stood up against Putin’s invasion to Ukraine and sanctions against Russian were implied all the leading crypto platforms found themselves in a quite a difficult situation.
A question of paramount importance has arisen.
It it OK to sustain the basic feature of any cryptocurrency, which is beyond any doubt its freedom and (mostly) anonymity, in a world where we are all trying to hurt Russians as bad as we can?
It is OK to close Russian crypto wallets on the trading platforms just because they are, well, Russian? Some of them have already made that choice, like Coinbase that blocks 25 000 Russian crypto addresses as of now.
But some people in the industry keep saying that’s a very bad turn of events. With terrible consequences that cannot be foreseen right now. Because the moment we start to apply censorship to the free world of cryptocurrency immediately makes it much less free.
Who is right and who is wrong here?
War in Ukraine, what it means to cryptocurrency? Let’s take a closer look.
First of all, let’s say that the Ukraine has shown how much cryptocurrencies mean in todays world by gathering over $88 million in crypto donations since the beginning of war. For example, Gavin Wood, founder of Polkadot, solely donated over $5,8 million to Ukrainians.
At the same time Ukrainian officials from the first day of war have started to attack major crypto trading platforms. They demand to switch off Russian users to prevent them use crypto to avoid strict international sanctions.
Many major cryptocurrency exchanges put forth defiant statements in return. While Ukraine asked them to freeze any accounts belonging to Russians, the exchanges call upon libertarian ideals of true crypto to back up their decisions.
They are basically saying that using cryptocurrencies freely, no matter what country are you in, is what crypto is about. It is freedom we are talking here, they say.
Almost everyone agrees that the sanctions plan aimed at devastating the Russian economy is righteous. And the idea that Russians should feel the pain trying to reach for dollars or euro, is plain and effective.
But what about crypto?
Russia has been very active in crypto lately. It seats on the 2nd place in the recent rating of the countries with most crypto owners percentage in population (right behind Ukraine, by the way). Roughly 12% of Russians own some cryptocurrency. And that’s 17 million people we are talking about!
There very few Russian crypto platforms out there, so most part of those Russian crypto owners do have accounts on Binance, Coinbase etc.
So while you block Russians from using Visa, Mastercard, Apple Pay at all and even deprive them of possibility to get any cash from their credit cards while they are abroad, it seems quite logical to cut their possibilities in crypto world. Or not?
That’s a defining moment for cryptocurrencies such as Bitcoin and Ethereum.
Crypto means freedom, right? Not so fast
Even in USA nowadays it’s a big political question whether to consider crypto, well, normal money with the necessity of state control. So there are some shades of grey in question of how free the free crypto world should be.
Many people say, crypto has become a way to avoid taxes and pay for illegal stuff. And they are right, of course.
At the same time in may countries, like China or Belarus cryptocurrencies still are the only way to move assets without being exposed to the Big Brother.
As with Russia the question goes in a slightly different direction.
It’s more of a moral issue now.
If we cut Russians from crypto exchanges and their wallets, we might hurt a lot of usual citizens who have nothing to do with Putin’s war. They will loose their savings.
But if we don’t. we might unwittingly help fuel a war of aggression against Ukraine or help Russian oligarchs preserve their wealth. Putin’s regime is based on oligarchs and their resources, if you must know.
So what shall we do?
Binance, the world’s largest crypto trading platform seems to have an answer to that.
A Binance spokesperson said in response to Ukrainian minister demanding tha ban for Russians that limiting Russians’ access to crypto “would fly in the face of the reason why crypto exists.”
Crypto in recent years moved from a fringe technology to being mainstream industry. It consists of dozens and dozens of companies backed with hundreds of millions of dollars of investment.
The underlying blockchain technology relies on distributed computing power which needs massive financing to stay online.
And the blockchain network itself is able to track who owns what without a central authority. Anonymity is possible to a certain extent. But it isn’t actually about freedom anymore. At least, not to the extent it was when Bitcoins was still young and cheap.
So, Binance is not going to declare war to Russian. And Coinbase in fact did declare some kind of war. Though it is still unclear whether Coinbase actually removes only the option of transferring crypto to fiat or will it completely lock all the funds kept in the Russian wallets.
What will others do?
So, war in Ukraine, what it means to cryptocurrency, happens to be a question with no clear answer but some vague but frightening thoughts are brought up. We are talking freedom here. And this freedom is definitely in danger.
