How Russia’s Invasion of Ukraine Is a Litmus Test for Cryptocurrency Exchanges

Many companies have withdrawn from Russia to protest Russia’s invasion of Ukraine. So far, major cryptocurrency exchanges in the U.S. have resisted, saying they won’t do it unilaterally.

This is a principled stand, and it is consistent with the guiding ethos of the cryptocurrency community. After all, these markets serve as an alternative to those dominated by governmental policy interference. And in Russia, as in Venezuela and in other zones of economic chaos, cryptocurrency is an important tool for ordinary citizens to resist financial totalitarianism.

So long as the U.S. Treasury Department and other financial regulators do not force the crypto markets to pull out of Russia, this principled stand is also defensible. Of course, if a federal ban on Russian access to U.S. financial markets is put into place, there isn’t flexibility or tolerance for inaction. All U.S.-based cryptocurrency exchanges will have to comply. And ignorance would not be a defense.

A third path

There is yet a third path that cryptocurrency markets should consider between these two positions – one that would preserve their core ethos while addressing one of the most central threats to the crypto markets, writ large.

It is worth the extra effort for the crypto community to explore such options in this case. Russia, after all, is not just another nation with crypto users. By one estimate, roughly 17 million Russians – about 12% of the country – own crypto (that’s about 50% higher than the ownership rate among Americans).

Those figures may understate crypto’s usage in Russia amid a collapse in the value of the Russian ruble. Blanketing such a market with sanctions would punish everyone in a large economy, by any measure.