The crypto community has been overwhelmingly supportive of the Ukrainian government this week. But a request from the deputy prime minister ruffled some feathers yesterday. Mykhailo Fedorov is calling for cryptocurrency exchange platforms to block Russian users. Why is the idea overwhelmingly rejected by the community
Ukraine’s deputy prime minister wants to block Russian users
This is a proposal published yesterday by Mykhailo Fedorov, the Ukrainian Deputy Prime Minister. The man is already familiar with the subject of crypto-currencies, as he himself announced the legal consideration of crypto-currencies by the government about ten days ago.
Since then, the war has begun, and the Deputy Prime Minister intends to use all his arsenal to defend his country. To the point of asking the major exchange platforms to block Russian users:
I’m asking all major crypto exchanges to block addresses of Russian users.
It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.
– Mykhailo Fedorov (@FedorovMykhailo) February 27, 2022
Mykhailo Fedorov goes far, asking exchanges to “sabotage ordinary users”, i.e. block all accounts belonging to Russians. Later, he shared a second tweet, informing his followers that the non-fungible token (NFT) platform dmarkets had decided to block funds from Russian and Belarusian users:
Received breaking news. @dmarket, a platform for trading NFT & In-game Metaverse items, decided to freeze the accounts of users from the Russian Federation and Belarus. Funds from these accounts could be donated to the war effort. Nowadays Robin Hoods. Bravo.
– Mykhailo Fedorov (@FedorovMykhailo) February 27, 2022
The seized cryptocurrencies could be donated to the “war effort,” according to the deputy prime minister, who calls the company a “modern-day Robin Hood. “
Demands that don’t sit well with the crypto community
But where the crypto community has so far shown support for Ukraine, it seems less than thrilled with these kinds of demands. On the one hand, blocking accounts goes against the ideals of decentralisation championed by cryptocurrency enthusiasts. On the other hand, Bitcoin (BTC) was created precisely to be an uncensorable currency – so no exceptions can be made, however tragic the situation.
The crypto community also questions the effectiveness of such a measure. Blocking and “sabotaging” ordinary Russian users does nothing in particular to prevent Vladimir Putin’s war.
Since yesterday, Russians have started to rush to cash machines, anticipating the exclusion of major local banks from the SWIFT network. Their possible blocking on exchange platforms would therefore do nothing more than cut off a people from access to alternative means of payment, without necessarily hindering the Russian government’s strategy.
Exchange platforms that won’t meet demand
So far, no exchange platforms have announced any such measures. Binance recently donated $10 million to the Ukrainian government, but its CEO Changpeng Zhao did not comment on any user blocking. He also said the platform is apolitical and focuses on the humanitarian crisis, not the military one.
Our teams have been working on multiple charity efforts non stop. Money/crypto/fees are not the key issues. Logistics on the ground, food, fuel, supplies are. for refugees, places to stay, visa, etc. Stay tuned.
Binance is apolitical, we just care about the people.
– CZ Binance (@cz_binance) February 26, 2022
At Kraken, CEO Jesse Powell spoke out in a long Twitter thread. First of all, he reminds us that the exchange blocks users, but only if the request comes from the authorities. Moreover, he believes that the public interested in cryptos is probably libertarian and therefore anti-war :
3/6 FWIW, I would guess that the vast majority of crypto holders on @krakenfx are anti-war. Bitcoin is the embodiment of libertarian values, which strongly favor individualism and human rights. In Canada, crypto was the only financial rail left for those who opposed the regime.
– Jesse Powell (@jespow) February 28, 2022
It remains unlikely that any major exchange platform will accede to the request of Ukraine’s Deputy Prime Minister. The reason crypto-currencies are proving their worth at the moment is precisely because they were created outside the reach of governments. It is therefore inconsistent to capitalise on their operating principle, while calling for centralised measures.
