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Cryptocurrency Sanction

Cryptocurrency & Sanctions – A Mismarriage?

Recently, prominent western politicians like Hillary Clinton said that Russians should be banned from the cryptocurrency space to prevent them from circumventing economic sanctions imposed on account of Russia’s invasion of Ukraine. Such unilateral decisions could cause many problems for Russia, Ukraine and the capital market in general.

As a starter, by restricting cryptocurrency access to Russians, the world would lose a good chunk of its digital assets market which is also a significant contributor to Bitcoin’s global mining hash rate (Russia’s contribution here is estimated to be 11% as of Jan 2022). It could result in the disappearance of several Web 3.0 projects based out of Russia. It could also potentially exacerbate the existing situation around the conflict. 

Another concern according to industry insiders really reflect both the empathy and helplessness of people living in Russia. As we speak, they are prohibited to donate to any charity organizations that are directly helping Ukrainians. And even if anyone out of sheer audacity does choose to donate, they can be convicted of treason with potential imprisonment of 20 years. That’s where cryptocurrencies can be used in lieu of fiat donations.

As many of us are aware, there are several private cryptos and stablecoins in use today which are not open source and accessible by officials easily unlike open source cryptos such as bitcoin and ether. A stablecoin, for instance, operating on a private blockchain network based out of the US can always keep transactions private, especially from Russian government officials. This could enable generous people living in Russia to safely donate to their neighbors suffering from the conflict.

Various ways and reasons to censor cryptocurrency

You can ban certain sections of people from using digital assets in many ways today. For example, government authorities can invoke emergency acts granting themselves power to freeze fiat and digital assets of citizens. And no, I am not talking about such a situation in a banana republic. As we all know now, Canada just did that recently to some of the government policy dissenters. Shutting down crypto exchanges – be it centralized (CEX) or decentralized (DEX) is also not a far-fetched idea.

The authorities can even go further and dig for IP addresses of certain users who would have purchased cryptos from CEXs in the past. They can also tie back coins purchased from DEXs to products and services used by users in question. That said, we all know that evil exists in this world in many shapes and forms unfortunately. We are totally with anyone including law enforcement to do everything possible to prevent and litigate criminal/illegal acts. After all, the free market will never be perfect in itself especially when it is abound by imperfect people and conditions.

But why target all for the actions of few?

A unilateral attempt to ‘disconnect’ any nation from using digital assets is unacceptable because that violates the very basic freedom and liberty governments are supposed to protect unconditionally. Yes it is natural to be furious at aggressors in a war. But why should citizens of an entire nation be banned from using cryptocurrency? Why should innocent people of a nation be punished collectively with sanctions for the actions of a few? In the name of punishing repressive regimes, we often end up punishing people in the lower rungs of that society essentially.

Of course there will be a time when our society is guided by decentralization upholding the values of the right to live and let live. Right to dignity. Right to liberty and freedom. I am not at all suggesting that it is wrong to question the status quo even at that point. I am suggesting that decentralization with necessary levels of centralization and regulation has to be embraced sooner rather than later if you are willing to stay true to the very ideals you lecture about to your voters during elections – that you will pursue equality for all. And all of us must embrace timely and useful upgrades to our archaic architectures on a regular basis to keep making real progress.

In the meantime, it is liberating to see Kraken FX and Binance reminding the world about the true purpose of crypto rejecting calls from Ukraine to block the crypto addresses of ordinary Russians. Here’s a quote from Binance’s spokesperson.

 

“Crypto is meant to provide greater financial freedom for people across the globe. To unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists.” 

We hope common sense prevails over populism and public posture at administrative levels in our societies. And we hope officials realize that with the evolution of cryptocurrency, they have finally found a tool that is capable of providing for every human being on the planet much better and sooner than they could have imagined. Cryptocurrency with its underlying technologies is the closest we have come to bringing equality in our society. Let’s move onwards and upwards. Our thoughts are with everyone affected in the Russia-Ukraine war.

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Opinions expressed in this publication are those of the author(s). They do not necessarily purport to reflect the opinions or views of Shardeum foundation.

About the Author(s) : Authors are crypto enthusiasts. Follow them on their Telegram channel

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