Good morning, and welcome to Protocol Fintech. This Tuesday: a blanket ban on Russian crypto wallets is doable but tricky, New Yorkers can’t trade the crypto that was made for them, and Flexpool canceled its service to Russian IP addresses.
Off the chain
An interesting thing happened as the ruble crashed in value Monday: The circulating supply of the Russian currency is now worth less than the total market valuation of bitcoin. That says more about the weakness of the ruble than the strength of bitcoin, but it’s still an interesting point on the chart. The dollar has much less to fear from crypto than a currency nobody wants anymore. In some ways, that’s what crypto and fiat have in common: They depend greatly on people’s beliefs.
— Owen Thomas (email | twitter)It's complicated
A top Ukrainian official’s call for crypto exchanges to block all wallets in Russia and Belarus underscores how crypto has become a major weapon in the crisis. But there’s disagreement on how to use it.
Ukraine Vice Prime Minister Mykhailo Fedorov’s request has been rejected by two major exchanges. And although it can be done, pulling off such a move would be really hard, experts say.
Don’t just target the oligarchs’ crypto. Fedorov wants exchanges “to block addresses of Russian users,” saying, “It's crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.”
- The move would be in addition to financial sanctions already in place mainly against top officials and billionaires identified as close allies of Vladimir Putin.
- The Biden administration, which has joined allies in imposing sanctions against Russia, reportedly is asking crypto exchanges to make sure Russian individuals and organizations aren’t using virtual currencies to avoid sanctions, according to Bloomberg. But two major exchanges say a blanket ban on crypto transactions is out of the question.
- Coinbase will block accounts and transactions involving individuals or entities mentioned in the sanctions that are already in place. But “a unilateral and total ban would punish ordinary Russian citizens who are enduring historic currency destabilization as a result of their government’s aggression against a democratic neighbor,” a spokesperson said.
- Binance also said it will block the accounts of Russian individuals targeted by the sanctions but will not freeze the accounts of other users from Russia, according to a report.
Can you really shut out all of Russia’s crypto wallets? Yes, but it’s tricky, experts say. “Mapping geolocational data on crypto wallets is tedious, but can be done,” Mike Fasanello, director of Training and Regulatory Affairs at Blockchain Intelligence Group, told Protocol.
- Chris Kline, chief operating officer and co-founder of Bitcoin IRA, said there are “IP identification methods that could possibly be used to stop transactions.” But “it would take a concentrated effort by several different entities both in the crypto and traditional finance sectors to coordinate something along what the vice prime minister of Ukraine is asking,” he told Protocol.
- Marco Bellin, CEO and founder of Datacappy, said crypto wallets are generally traceable, but there are ways to obfuscate transactions. “You can spoof your geolocation. So you can be in Russia [or] Belarus and pretend you're in New York,” he told Protocol.
- Blockchain and DeFi make crypto transactions hard to block. “If I'm in Russia, and I want to transact with somebody in North Korea or Iran, somewhere that isn't trying to deny you services, it's nearly impossible to stop,” he said.
Hackers are also targeting Russian wallets. Putin’s allies who store big chunks of wealth in crypto wallets have a bigger problem: hacker activists aggressively targeting their accounts. “Those guys have really sophisticated tools,” Bellin said. “If I were one of the oligarchs, quite honestly, I would have one of my tech guys trying to figure out how to get the money out.”
— Ben Pimentel (email | twitter)A MESSAGE FROM NOVOPAYMENT
The future of the digital economy is in our hands. That’s why NovoPayment partners with fintechs to turn their visions into reality. Unlock the power of NovoPayment’s suite of complementary BaaS solutions from digital banking to card solutions, payment infrastructure, and more - all on our easy-to-use platform. Let’s innovate.
On the money
EBay might accept crypto as a payment method. In an interview, CEO Jamie Iannone said that the ecommerce giant was looking at adding cryptocurrencies as a method of payment to target Gen Z and millennials. It already has partnerships with Google Pay, Apple Pay and Afterpay.
Flexpool canceled all services to Russian users. The world’s fifth-largest ethereum mining pool has announced that it is canceling services to Russian IP addresses, likely the first mining pool to do so.
The Israeli Ministry of Defense seized 30 crypto wallets linked to 12 accounts due to terrorist activity. The wallets belonged to businesses that assisted the Al'matchadun currency exchange company belonging to the Shamlach family, whose revenue helped provide funding for the Hamas terror organization.
JPMorgan Chase’s secret “Project Bloom” will expand its reach in the private market. The project includes a digital network for clients to match startups with investors and aid in securing funding.
New Yorkers can’t trade NYCCoin, even though it was made for them. While New York City residents can mine NYCCoin, they cannot trade on any crypto exchanges as the state requires an exchange to have a BitLicense to operate. None of the exchanges with one offer NYCCoin trading.
Overheard
Valve President Gabe Newell is still not a fan of crypto and NFTs when it comes to Steam. “There's a difference between what it should be and what it really is currently in the real world. And that's sort of where we were at with the blockchain-based NFT stuff: so much of it was ripping customers off,” he said, referring to the decision to remove bitcoin as a payment method.
Polkadot CEO Gavin Wood said that he’ll make a donation to aid in Ukrainian relief, on one condition. “If you post a DOT address I'll personally contribute $5m,” he tweeted in response to Ukraine’s tweet with bitcoin and ERC-20 wallet addresses.
The Bank of Russia seemed indifferent to the newly announced SWIFT sanctions. “The Bank of Russia has the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector,” it said in a statement. Others in the industry even claimed that the sanctions could boost the ruble as an international currency.
Deal flow
Veev raised $400 million. The building technology company’s series D round was led by BOND, with participation from LenX, Zeev Ventures, Fifth Wall Climate Tech and JLL Spark Global Ventures.
Leasy secured $2 million. The Lima-based startup, which offers financing to ride-hailing drivers in Latin America, said its seed round was led by Magma Partners. The company also secured $15 million in debt financing.
Hack raised $200 million for a crypto fund. Investors behind the blockchain programmer event launched the fund to support early-stage crypto startups, according to TechCrunch.
The London Stock Exchange acquired Tora for $325 million. The acquisition of the cloud technology provider was a move by the stock exchange to broaden its exposure to digital assets.
Betterment acquired the partner and customer relationships of Gradvisor. In addition to its Student Loan Management solution launch, the acquisition is poised to address different stages in employees’ lives.
Rakuten Symphony acquired Robin.io. The acquisition will allow the telco-arm of Rakuten Group to integrate Robin.io’s tools for multicloud mobility, automation and orchestration into its portfolio.
Visa partnered with payment and financing firm Tribal. The partnership is intended to expand Visa’s offerings for small and medium-sized businesses in Latin America and the Caribbean.
A MESSAGE FROM NOVOPAYMENT
The future of the digital economy is in our hands. That’s why NovoPayment partners with fintechs to turn their visions into reality. NovoPayment’s API-based platform delivers digital banking, payment, and card solutions that adapt, scale, and evolve alongside your company. Our modular approach empowers you to innovate your way.
Thanks for reading — see you tomorrow!