The CEO of Coinbase Is Skeptical that Russian Oligarchs Would Start Using Crypto

Brian Armstrong, the CEO of Coinbase, stated that the exchange will not block all Russian users altogether.

Concerns that the Russian oligarchs would use cryptocurrency to dodge Western sanctions have prompted Brian Armstrong to respond.

Coinbase is obliged to abide by the law, according to Armstrong, and will prohibit all transactions originating from IP addresses that could be associated with sanctioned parties. On the other hand, Coinbase would not prohibit all Russians from its platform as a preemptive measure unless the US imposes those orders later on, per Armstrong. 

The exchange was a cash-to-coin transfer, according to a source with knowledge of the situation while Braun accepted Bitcoin (BTC) as compensation. 

Armstrong stated that “we don’t think there’s a high risk of Russian oligarchs using crypto to avoid sanctions.” He noted that concealing considerable amounts of money on open and public ledgers is much more difficult, rather than hiding it in cash, art, gold, or other assets that are less detectable. He went on to say that Coinbase was not the only one its judgment and that specialists from the US Treasury and the National Security Council concurred.

Armstrong referred to the webinar that took place on Wednesday during which Carole House, the Cybersecurity Director of NSC Carole House stated the following: 

“The scale that the Russian state would need to successfully circumvent all U.S. and partners’ financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state.”

Crypto has been at the center of debates over Ukraine’s invasion by Russia, with many concerned that the country could use the technology to circumvent sanctions that were imposed by many countries around the world. Senator Elizabeth Warren, among the most outspoken crypto opponents in the US government, and three other Democratic legislators urged the Treasury Department on Wednesday to guarantee that the cryptocurrency industry complies with Russia’s sanctions.

In a letter sent to Janet Yellen, the US Treasury Secretary, the Senators argued that “strong enforcement of sanctions compliance in the cryptocurrency industry is critical given that digital assets, which allow entities to bypass the traditional financial system, may increasingly be used as a tool for sanctions evasion.”

Mykhailo Fedorov, the Deputy Prime Minister of Ukraine openly asked prominent cryptocurrency exchanges to prohibit all Russian users on Saturday, arguing that it was critical to not only freeze the accounts of officials but also disrupt general users from carrying out transactions.

His call for a blanket ban on Russian nationals, however, was subjected to intense pushback from the cryptocurrency community as well as several of the industry’s top exchanges, where aside from Binance and Kraken, Coinbase is the latest to join the objection. 

It is important to emphasize that the Western allies’ plethora of sanctions against Russia is not really broad; rather, it is focused on select Russian banks, state-owned enterprises, and oligarchs.