There are lingering concerns that digital currencies can be used to bypass the devastating sanctions levied against Russia and its cronies. However, Coinbase exchange believes cryptocurrencies can be used to enhance sanction compliance efforts.
Coinbase Blocks 25,000 Russian Addresses Linked To Individuals, Entities
According to a blog post on Monday, Coinbase has restricted more than 25,000 addresses of Russian individuals and entities that it suspects of engaging in criminal activity, the company’s Chief Legal Officer Paul Grewal said.
Grewal indicated that these addresses were identified via Coinbase’s own “proactive investigations”, and they were immediately shared with the United States government to “further support sanctions enforcement.”
He further noted that sanctions are important in promoting national security, adding that the exchange supports economic sanctions imposed by governments in a bid to avert unjustified aggression.
To offer this support, Grewal said the exchange has taken various steps to restrict sanctioned individuals and entities, detect actors who try to evade sanctions, and anticipate potential threats. This revolves around processes that include using know-your-customer checks to screen customers that are in international sanction lists and leveraging geofencing to block IP addresses from sanctioned countries from gaining access to the exchange.
Why Russia Is Unlikely To Use Crypto To Mitigate Sanctions
The US and several other countries around the globe have laid crippling sanctions against the Kremlin in recent weeks in response to the attack on Ukraine. For instance, Russia was removed from the SWIFT global payments network and overseas assets of the Bank of Russia were frozen.
While some experts have pointed out that the Russian government and oligarchs connected to President Vladimir Putin may use crypto-assets like bitcoin to skirt sanctions, the Coinbase legal adviser disagrees.
He pointed to the public nature of blockchains which records all crypto transactions and can be scrutinized by anyone. Grewal also highlighted the fact that crypto is too traceable and the transactions are permanent once registered on the blockchain.
“In addition to these technical advantages, adoption of digital assets is still nascent, making their use for widespread sanctions evasion — the kind that robs sanctions of their impact — unlikely, a fact recently noted by a national security expert.”
Coinbase, however, will not be instituting a total ban on transactions involving its Russian clientele. Grewal said the exchange “helps everyday people to protect, build, and share their wealth through crypto technology”.
This echoes sentiments by Coinbase CEO, Brian Armstrong, who previously made it clear that only a legal requirement would force the exchange to block ordinary Russian customers.