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Following its invasion of Ukraine, sanctions on Russia are becoming more and more devastating. Recently, payment providers decided to block money from coming in and out of the country. The pressure is mounting on crypto companies as well.
Last weekend, payment processing giants Visa and MasterCard joined PayPal in suspending cross-border payments for their Russian clients. The decisions are set to comply with sanctions of NATO and other western countries, where these companies have their headquarters in.
The largest credit-card company Visa released a statement on the topic on Saturday. They said that they are working with their clients and partners within Russia to end all cross-border Visa transactions over the coming days. Once complete, all transactions initiated with Visa cards issued in Russia will no longer work outside the country. Any Visa cards issued by financial institutions outside of Russia will no longer work within.
Al Kelly, chairman and chief executive officer of Visa Inc. said that they regret the impact this will have on their partners and clients, but they must respond in line with their values.
We are compelled to act following Russia’s unprovoked invasion of Ukraine and the unacceptable events that we have witnessed.
Visa Follows Mastercard, PayPal
Mastercard is also suspending all its network services in Russia. The spokesperson for the company said that “After operating in Russia for 25 years, they claim not taking this decision lightly.”
After previously blocking multiple financial institutions from the Mastercard payment network, they decided to ramp up their response. From now on, the Mastercard network will no longer support cards issued by Russian banks. Any Mastercard issued outside of the country will not work at Russian merchants or ATMs.
When it is appropriate, and if it is permissible under the law, we will use their passion and creativity to work to restore operations.
Russia’s central bank said in a statement that Visa and Mastercard cards would continue to work for internal payments, following the announcements.
“Operations on them are processed within the country in the National Payment Card System, and sanctions do not affect them,” the central bank said. “Customer funds on accounts linked to such cards are fully preserved and available.”
However, payment processor PayPal shut down all its services in Russia on Saturday, including internal payments. The company’s President and Chief Executive Dan Schulman sent a letter of support to the Ukrainian Prime Minister Mykhailo Fedorov.
PayPal stands with the international community in condemning Russia’s violent military aggression in Ukraine. Under the current circumstances, we are suspending PayPal services in Russia
Pressure on Crypto Companies
As more and more traditional payment providers join the sanctions, crypto exchanges face pressure to join as well. Ukrainian politicians insist that crypto should be part of the sanctions.
Earlier, the Ukrainian prime minister called for the unprecedented move, saying that these sanctions should not only include Russian oligarchs.
It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians but also to sabotage ordinary users
Ukraine has asked Coinbase, Binance, Huobi, KuCoin, Bybit, Gate.io, Whitebit and Ukraine-based Kuna to block all Russian accounts. However, the response from crypto exchanges differed. Blocking personal accounts is an extremely controversial move in the crypto space. While most exchanges rejected a call to embargo ordinary Russian users, some complied with Ukrainian pleas.
Most recently, Coinbase decided to block 25,000 addressed in Russia, supposedly involved in illicit activity.
The largest Crypto exchange company Binance said it will work to target those that may use crypto for malicious ends. However, they say that they want to reduce the impact on innocent people, including ordinary Russian citizens. Still, they are watching what the international community is doing, and may follow with more severe boycotts.
Jesse Powell, CEO of crypto exchange Kraken, said the company would block Russian addresses if legally compelled to.
On the other side, South Korean companies decided to take the Ukrainian line and blacklist all their Russian customers from using their services.