Coinbase CEO: "Ordinary Russians Are Using Crypto As A Lifeline"

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by Tyler Durden
Friday, Mar 04, 2022 - 11:00 PM

As we reported earlier this week, most popular crypto exchanges have declined requests by western officials to cut off all Russian customers, as crypto trading volume soared as investors appeared to front-run expectations for massive capital outflows as sanctions bite.

While most trading denominated in Russia rubles has been taken place on Hong Kong-based Binance, even popular US exchanges like the publicly traded Coinbase have refused to cut off all Russian users - at least, for the moment.

And for the first time since this "controversy" first emerged, Coinbase CEO Brian Armstrong has spoken up to offer an explanation. And that explanation is that millions of ordinary Russians are now using crypto "as a lifeline" to preserve their hard-won assets during a time when the Russian ruble, and other Russian assets, are being mercilessly devalued.

"Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed. Many of them likely oppose what their country is doing, and a ban would hurt them, too," Armstrong said.

As Armstrong pointed out, Coinbase is obligated to comply with US sanctions, like any other US-based business. But until sanctions stipulate otherwise, the exchange will continue providing services to the Russian people (excluding those whose names have wound up on the US Treasury's sanctions list).

And bitcoin's public blockchain, a feature of most cryptocurrencies, makes it an ill-suited avenue for Russian oligarchs looking to protect their billions, he added.

See the full thread below:

Armstrong's Twitter comments reflect those from Binance CEO Changpeng "CZ" Zhao, who said on Wednesday that it would be "unethical" for his exchange to restrict all Russians. "It's not our decision to make whether to ban Russians...we just follow rules, we don't make them. Also, just from an ethical point of view, many Russians don't support this war."

Does this leave crypto on the "wrong side" of the norms? Not necessarily, CZ said.

"We're doing exactly what their recommendations are."

Just like all major banks and any other financial institutions.

And as strategists from Citi explained earlier this week, while the potential for capital flight from Russia remains high, trading volumes (although impressive-looking on the chart) have been relatively small in absolute terms so far (around 210 bitcoin per day on average).

This suggests that the price action is more due to investors positioning for an expected uptick in demand from Russia, rather than Russian demand itself, and furthermore, it underlines the reality that bitcoin and crypto more broadly are being treated like a 'boogeyman' by Western officials.