How the Ukraine conflict became a turning point for cryptocurrency
Categories: Crypto News
Many major cryptocurrency exchanges put forth defiant statements this week when Ukraine asked them to freeze any accounts belonging to Russians, with some exchanges calling upon crypto’s history of libertarian ideals to back up their decisions.More quietly, however, many were complying with the sanctions plan aimed at devastating the Russian economy.The gap between the words and actions of crypto’s biggest players points to the challenges that the crypto community now faces as a mainstream industry in the midst of a geopolitical and humanitarian crisis — one that now looks like a defining moment for cryptocurrencies such as bitcoin and ethereum. In between, cryptocurrency exchanges and bitcoin hard-liners — both of whom have espoused what they say is the libertarian ethos embedded in crypto — have had to wrestle with tough questions about just how much they want to embrace a technology that critics argue has little practical value aside from money laundering and investment hedging while requiring huge amounts of electricity and the burning of fossil fuels.And they’ve also had to confront the reality that making crypto into big business means accepting things like international sanctions. Crypto in recent years moved from a fringe technology to the kind of mainstream industry that pushes multiple Super Bowl ads from companies backed with hundreds of millions of dollars of investment. The underlying blockchain technology relies on distributed computing power to create public and unbreakable digital ledgers that can track who owns what without a central authority. At the start of the sanctions against Russia, one of the most strident statements came from Binance, the world’s largest crypto exchange. A Binance spokesperson told CNBC on Monday that limiting Russians’ access to crypto “would fly in the face of the reason why crypto exists.” Experts have said that Russian President Vladimir Putin won’t be able to use virtual currency to evade sanctions on a large scale, because even at $2 trillion the crypto market isn’t big enough and crypto exchanges have compliance departments dedicated to catching money laundering. “We have a number of sophisticated tool sets that allow us to understand who are sanctioned individuals, sanctioned nations, be able to track cryptocurrency and fiat deposits and withdrawals, and make sure that we block those users, as we have been doing since our inception,” Brett Harrison, the president of exchange FTX.US, told CNBC. A fabled outlaw image may once have benefited digital coins by adding to their allure, but that image is now a potential liability as regulators and lawmakers swarm around the community. Cryptocurrency-linked crime hit a record last year, with illegal addresses receiving $14 billion in digital currencies, according to research firm Chainalysis, although that represented 0.15 percent of total crypto transaction volume.