U.S. Lawmakers Want Crypto Exchanges To Cut Russian Wallets

With the international community still hitting Russia with sanctions over its relentless invasion of neighboring Ukraine, many have been concerned about the possibility of the country evading these measures with crypto.

U.S. Lawmakers Want Crypto Exchanges To Cut Russian Wallets

Even while many have concealed that it would be impossible for Russia to get what it wants with digital assets, American lawmakers are now going on the offensive against all Russian people.

Cutting Ties To All Russians

Two weeks ago, Rep. Brad Sherman - a Democrat representing California’s 30th congressional district - confirmed that he would introduce a bill in the House of Representatives targeting Russian crypto interests. Speaking at a hybrid meeting with the House Financial Services Committee, Sherman explained that his bill would crack down on U.S. businesses handling any crypto transactions for Russian individuals and financial institutions.

Sherman’s bill is expected to be a counterpart to another bill sponsored by fellow Democrat and Massachusetts Senator Elizabeth Warren. The latter bill proposes giving the Biden administration “explicit authority to require that crypto exchanges that are subject to U.S. law stop facilitating transactions with Russian-based crypto wallets.” The Senator introduced the bill during a Senate Banking Committee hearing, saying that she was going to bring it to the Senate floor.

For now, the text for both bills remains unavailable. However, it has been reported that Warren’s proposed bill will give the Treasury Department the authority to immediately stop crypto exchanges under U.S. jurisdiction from processing transactions involving any Russian-linked wallets. This means that Russian citizens and companies looking to perform crypto transactions on these platforms would immediately be barred from doing so.

Probably No Way Here

It is difficult to see how any of these bills will pass. Besides the fact that many on the other side of the congressional aisle will see it as giving the government way too much power over the crypto industry, there is the fact that such a move will get heavy pushback from crypto exchanges.

Sherman, a notably anti-crypto Congressman, has made some wild claims in the past - including calling for a complete ban on digital assets. Speaking on his new bill, The Congressman cited a request from Ukraine’s Minister of Digital Transformation, who asked all crypto exchanges to block the addresses of Russian users. Still, this seems like an overextension of the sanction already placed on several notable Russian citizens and the government.

Several big names in the crypto space have already spoken out against this move. Changpeng Zhao, the chief executive of Binance, explained that the exchange would abide by the international community’s sanctions. However, the company won’t be blocking all Russian wallet addresses on its platform. Kraken’s CEO Jesse Powell also pointed out that taking such an action will require legal action.

The view of these CEOs is that crypto shouldn’t be a source of exclusion. Cutting out an entire country from crypto services just because of the actions of its leaders doesn’t necessarily seem right, and it definitely goes against the principle of global financial inclusion on which the crypto industry as we know it today was built.

There’s A Strong Reason To Worry

Of course, this isn’t to say that the lawmakers don’t have a reason to be concerned. Ever since the conflict began and sanctions started rolling from the international community, there have been concerns over whether Russia could evade them with crypto.

Things are expected to go up a notch now that Russia appears to be hitting back with its own sanctions. The country provides a significant chunk of Europe’s energy, and the Kremlin has hinted that it will now force countries to pay for their energy in the ruble - or perhaps even Bitcoin.

Last week, Russian news source RBC reported that Pavel Zavalny, the head of Russia’s State Duma Committee on Energy, has floated the possibility of getting Bitcoin as payment for energy - especially from “friendly countries” like Turkey and China. Zavalny explained that those countries could begin paying in the ruble, Chinese yuan, Turkish lira, or Bitcoin - a significant departure from the usual dollar standard.

“We have been proposing to China for a long time to switch to settlements in national currencies of rubles and yuan. With Turkey, it will be lira and rubles. The set of currencies can be different, and this is normal practice. If there are Bitcoins, we will trade Bitcoins,” Zavalny said at a press conference.

The energy chief added that “unfriendly countries” could choose to also pay for their energy in gold or rubles. It is unclear whether Russia can change the terms it already has with other countries to make the shift from paying in dollars or euros. But, the country appears to be exploring this opportunity.

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