Russian firms rush to open Chinese bank accounts as Western sanctions disrupt cash flow

Serving Russian Customers Is Both a Risk and an Opportunity for Exchanges: Crypto Moves

Cryptocurrency exchanges Coinbase and Binance reiterated on Friday that they have no plans to block their Russian customers from using their platforms, even as traditional financial firms keep their distance.

On February 27, Ukrainian Deputy Prime Minister Mykhailo Fedorov asked crypto exchanges to block the digital wallet addresses of Russian users, preventing them from trading cryptocurrencies.

“We believe everyone deserves access to basic financial services unless otherwise required by law,” Coinbase CEO Brian Armstrong said in a series of tweets on Friday.

“We are not going to unilaterally freeze the accounts of millions of innocent users,” a spokesperson for Binance, the world’s largest crypto exchange, said in a statement emailed to Reuters.

The decision is a risk for stock exchanges as they still have to comply with sanctions imposed on Russian banks, companies and individuals, a list that grows almost daily as Western countries seek to isolate the Russian economy in response to its invasion. from Ukraine.

Most major Russian banks have been excluded from the SWIFT international payment system.

As crypto exchanges hire more experienced compliance staff, getting it wrong could be the end of the road for some of these companies.

BNP Paribas was hit with a $9 billion fine by US authorities in 2015 for processing payments on behalf of sanctioned companies. HSBC and Societe Generale accepted intrusive audits by regulators instead of financial penalties.

However, the rewards for doing it right are significant, both financially and reputationally.

Trading volumes between the ruble and cryptocurrencies hit $141 million on Monday, a three-fold increase week-on-week according to Reuters.

Successfully serving Russian customers while adhering to sanctions could also give the biggest cryptocurrency exchanges a seat at the mainstream finance table if they can be seen as trusted parties in the global financial system.

While cryptocurrencies have a reputation for being a conduit for the proceeds of crime, the regulations are actually quite strict for large exchanges, which require government identification when signing up and often have to go through vetting” know your customer” if you are moving larger amounts. silver.

The money is usually transferred to crypto accounts at traditional banks, which means there is an extra layer of compliance for anyone who wants to use their crypto assets for illicit activity.

Binance announced this week that it would donate $10 million through its charitable foundation to help Ukraine, to be split among nonprofits including UNICEF.

Shawanda H. Saldana