United States-based Kraken is the latest to join the long list of crypto exchanges that have restricted accounts of their Russian users in compliance with European Union (EU) sanctions against Russia.
Kraken Halts Services To Russian Clients
Last Wednesday, the San Francisco-based crypto trading platform informed its Russian clients through email messages that the exchange would no longer offer cryptocurrency services. The email message on October 19 read, “Due to the new European legislation, we have to take measures to restrict your Kraken account.” The announcement also informed Russian users that they could withdraw funds by requesting Kraken.
“We will update our support center if there are any changes. We apologize for the inconvenience caused,” the Kraken email statement added.
Kraken confirmed that it was taking this move to conform to the EU’s new sanctions package.
“Kraken complies with the legal and regulatory requirements in all jurisdictions we operate in. Since the EU’s announcement, we have been working to make the changes needed to comply with the latest package of sanctions against Russia.”
However, the crypto firm did not specify whether there was a time limit within which Russian clients should withdraw from the platform.
Kraken’s decision to close the door on its Russian users follows the EU’s announcement of its latest sanctions package, placing a complete ban on all international crypto transfers between Russia and its residents. The new package was released as part of the sanctions the EU Council has put in place since 2014, intending to punish the vast Eurasian country for its invasion of and aggression against Ukraine.
The EU council released the latest restrictions in an October 6 Twitter post noting:
“The EU has adopted new sanctions in response to Russia’s annexation of Ukraine. These include: introducing an oil price cap into EU law and additional trade restrictions.”
The newest sanctions enforce a blanket ban on all crypto payments flowing from the EU into Russia. Previously, these transfers were limited to 10,000 euros (~$9,800).
With this move, Kraken joins other crypto companies that have decided to deny services to users in Russia. Firms like Blockchain.com, Crypto.com, and Local Bitcoins announced last week that they would ban Russian users from accessing their services.
Kraken’s Change Of Heart
The news contradicts Kraken’s statements earlier in the year that it would keep offering its services to Russian users, saying that such a move would be “unfair” to the average Russian who may be opposed to the war.
In March, Kraken’s co-founder and former CEO Jesse Powell said that denying Russian customers access to their accounts was an extreme measure” that is “far beyond turning off someone’s access to their music streaming service, or their photo sharing app.”
In February, a Ukraine government official posted a statement on Twitter requesting “all major crypto exchanges to block addresses of Russian users.”
Powell responded to this call by saying that Kraken was not ready to do that without a legal obligation. He said:
“I understand the rationale for this request, but, despite my deep respect for the Ukrainian people, @krakenfx cannot freeze the accounts of our Russian clients without a legal requirement to do so. Russians should know that such a requirement could be imminent. #NYKNYC.”
Despite the latest restrictions, there are crypto exchanges that are still offering services to Russian users. Binance, the largest crypto trading platform in the world, is still debating whether to comply with the sanctions fully or not. Another digital asset exchange Garantex has not yet implemented the restrictions and continues to offer Russian customers a wide range of crypto services.
Others who are yet to implement the ban are Mexc Global, OKX, KuCoin, and Huobi Global. Singapore-based crypto firm ByBit has affirmed its commitment to support transparent and decentralized rights adding that it will not impose restrictions on Russian users, many of whom may be opposed to the government’s actions and the war in Ukraine.