For the crypto industry, supporting sanctions is an opportunity to rebrand

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  • In response to Russia’s military invasion of Ukraine, economic sanctions were implemented which cut Russian banks off from the international payments and messaging network SWIFT, and private sector payment companies, such as Visa, PayPal and Mastercard.
  • Concerns quickly mounted that the Russian state, as well as companies and oligarchs associated with it, could turn to digital currency exchanges as a backdoor to side-step sanctions.
  • In the United Kingdom, the Bank of England and Financial Conduct Authority asked crypto firms to enforce sanctions across their platforms, and central banks and regulators around the world have since joined this chorus of concern.
  • Most recently, Japan announced it would be revising its Foreign Exchange and Foreign Trade Act, which aims to widen its breadth to apply to crypto assets, meaning exchanges will be required to assess whether their clients are Russian sanction targets.
  • Binance, the worlds biggest exchange, as well as Coinbase and Kraken, have all shown empathy for the plight of Ukrainians, and some have frozen accounts linked to sanctioned individuals, but they have all stopped short of stepping back out of Russia or blocking all money flows into and out of the country.
  • The Ukraine conflict has unearthed a tension at the ideological heart of cryptocurrency. Digital currencies were first imagined with a vision of creating a decentralized global financial system, free from financial tinkering by governments, central banks and large financial services firms.
  • Ideological support for decentralization can never justify the conscious facilitation of criminal activity.
  • The current crisis calls for a united collaborative response from every corner of every industry and provides a rare window for the global crypto sector to stand together and take unified action.
  • Failing to read the room on this crisis risks jeopardizing the trust the crypto industry has built in recent years with regulators, policymakers and consumers.
  • The Financial Stability Board announced in February it would be developing a global regulatory framework for crypto assets, the first significant step in international homogenous guidelines.
  • As it stands, there is no sign that these regulations will mandate action on economic sanctions, but they will introduce further checks and balances that will lend greater transparency to the money flowing through digital asset exchanges and further dissuade illicit activity.
For the crypto industry, supporting sanctions is an opportunity to rebrand
For the crypto industry, supporting sanctions is an opportunity to rebrand 2

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