March 17, 2022
By Sharan Kaur Phillora
Cryptocurrency exchanges are risking long-term damage to their industry for remaining in Russia as Western governments seek to isolate Moscow, the head of the London Stock Exchange Group told Reuters on Wednesday, calling it a “watershed moment.”
Here’s what we know:
- Most crypto exchanges have rejected calls to ban all Russian users. This has raised concerns among European officials and US politicians that digital assets may be used to dodge sanctions imposed by the US and Europe in the aftermath of Russia’s invasion of Ukraine.
- According to David Schwimmer, LSEG’s chief executive officer, crypto exchanges are at a “fork in the road” between embracing an ideology of regulatory independence or aligning more closely with the global financial system, which emphasizes the need for regulation and transparency rules.
- While Russian figures and financial institutions have been placed on a US sanctions list that prohibits American firms from doing business with them, European Allies and Canada have removed key Russian banks from SWIFT, which hampers their access to global financial markets. This has led to a debate whether cryptocurrencies can be a way for those on sanctions lists to evade the restrictions.
- Bitcoin and other cryptocurrencies were designed to be free of central financial authorities like governments, banks, and central banks. They allow for “peer-to-peer” transfers that can be done between users online without any intermediaries. There is a likely possibility that Russian authorities and sanctioned individuals might use this setup to shore up their assets and continue making international payments.
- This can be easily done through so-called privacy coins – a class of cryptocurrencies that obscures the identity of users more than bitcoin. Russia could also tap into some of its resources to engage in crypto mining – the energy-intensive computing process that leads to the creation of bitcoins and other digital money.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.