Refugees are seen as they try to get in to Poland at the border crossing in Medyka, eastern Poland as refugees continue to arrive from Ukraine on March 1, 2022. - Overall, more than half a million people have fled Ukraine since its Soviet-era master Moscow launched a full-scale invasion on February 24, with more than half fleeing into neighbouring EU and NATO member Poland, the United Nations said on February 28, 2022.
Photo: Wojtek Radwanski/AFP via Getty Images

Money-transfer companies are getting swept into the Russian invasion of Ukraine

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Wednesday: weaponizing wire transfers, Satish Kumbhani disappears, and Hillary weighs in on crypto.

Off the chain

Crypto has been dominating the headlines, and it’s understandable, given the novelty of the first crypto war. But it’s a little early to write off fiat currency, which is going to play a far more decisive role in this conflict. That’s why I asked Tomio to take a look into how the traditional money-transfer business was responding to sanctions and other disruptions. Read on for more.

— Owen Thomas (email | twitter)

Weaponizing the wires

There’s been a keen focus on the role of crypto in the war between Russia and Ukraine, both as a means of bypassing sanctions against Russia and potentially helping Ukraine. Lost in that discussion is how the conflict is affecting the far larger and, frankly, more important flows of fiat currency.

The West’s sanctions haven’t generally prohibited sending ordinary Russian citizens money, but sanctions don’t make it easy. The U.S. and other countries have imposed a variety of restrictions on Russia’s financial sector, and have said they will shut down SWIFT messaging for certain Russian banks. All of that complicates operating the financial machinery to execute a transfer.

Some companies are acting to shut down the movement of money to Russia. It’s just not always clear why.

  • Money transfer companies Wise and Remitly have stopped money transfers into Russia. Zepz and TransferGo have also blocked their services in the country.
  • Revolut still appears to support transfers in its app, as does PayPal’s Xoom. Revolut noted it was operating in compliance with the U.K.’s FCA and other jurisdictions, and would “take further action as necessary.”
  • There are some other ways to send money, such as prepaid cards, which may still be viable, said Melody Brue, senior analyst at Moor Insights and Strategy. But the options are limited.

Some companies cited sanctions compliance. Personal ties and corporate obligations may also have influenced some companies’ responses.

  • Visa and Mastercard said their networks are blocking Russian financial institutions as a result of sanctions.
  • “With regard to Russia, as a result of and in compliance with the ongoing sanctions, we have suspended service to RUB,” a Wise spokesperson said.
  • Wise grew up in Russia’s shadow. The company was founded by two Estonians, one of its oldest offices is in Cherkasy and many employees are from Ukraine.
  • Revolut CEO Nik Storonsky is Russian, with a Ukrainian father. His co-founder, CTO Vlad Yatsenko, is Ukrainian, and has blasted Putin as a “brazen liar.” The company has customers and employees in both Russia and Ukraine.

Moving money is not easy in Ukraine either. With people trying to get out and others sending funds for aid, there are a host of complications.

  • Wise and Revolut both waived fees for money transfers to Ukraine. Citing the difficulty of moving money to Ukraine, Wise capped transfers into the country at $2,500.
  • Revolut has also enabled instant, fee-free donations to the Red Cross for Ukrainian relief efforts.
  • Ukraine’s central bank has suspended digital money transfers and revoked the local banking licenses of two Russian banks operating in the country. All those disruptions are sure to make transfers slower and more difficult.
  • But the government is also working to make accepting donations simpler. You might have heard about Ukraine’s bitcoin wallet, but did you know it’s also accepting donations via Google Pay?

Expect more attention on these financial flows. Sanctions and various other measures are just starting to be implemented, which will affect companies and individuals alike.

  • Beyond the long lines at ATMs and collapsing currency, there are also many who will feel the secondary effects of the sanctions, like Russians working abroad who send money home to relatives, Brue said.
  • Remittances were less than 1% of Russia’s GDP as recently as 2020, but could become more important — and contentious — as the economy crumbles under the weight of sanctions and other restrictions.

Effects like these help explain some of the early hesitations around sanctions: Western governments wanted to target sanctions to Putin and his inner circle, not ordinary Russian citizens. With the crisis deepening, it’s inevitable that these small, everyday transactions will see disruption, too. “It has such a huge ripple effect,” Brue said.

— Tomio Geron (email | twitter)


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On the money

On Protocol: Mastercard and Visa announced they blocked multiple Russian financial institutions on the U.S. sanctions list. The list includes Russia’s central bank, Sberbank and VTB Bank.

Electric Capital raised $1 billion. The venture capital firm plans to fund crypto networks, Web3 protocols and blockchain-enabled businesses, and will continue to invest between $1 million to $20 million in equity and tokens in Web3 areas.

The European Parliament scrapped a bitcoin ban from a draft of its crypto regulation bill. In an effort to accelerate the passage of the Markets in Crypto-Assets bill, lawmakers dropped a section of the bill that banned crypto services from trading coins based on proof-of-work over environmental impact concerns. That measure would have essentially banned bitcoin and ether.

BitConnect founder Satish Kumbhani has disappeared. After being charged by the SEC with allegedly defrauding U.S. investors for over $2.4 billion, Kumbhani vanished from his native India. Officials’ efforts to locate him have been unsuccessful.

A DebtHammer survey found that “buy now, pay later” plans have fueled debt burdens. According to the survey, 32% of BNPL users have had to skip paying an essential bill to make their payments. Even after skipping a bill, 30% still struggled to make BNPL payments.


Chris Lehane, chief strategy officer of KRH Partners and former Airbnb policy chief, thinks that Web3 is the future of democracy. “We are seeing how the rapid deployment of tech in defense of freedom can make it possible for anyone, anywhere to contribute to a 21st-century version of WWII's Arsenal of Democracy,” he wrote in a Twitter thread.

Jake Chervinsky, head of Policy at the Blockchain Association, doesn’t think that crypto can save Russia, and outlined the reasons why in a long Twitter thread. “Setting aside valid privacy concerns, the transparency of public ledgers + the analytics capabilities of US forensics firms = crypto is useless for sanctions evasion,” he tweeted.

Hillary Clinton, however, still thinks that crypto exchanges need to put economic pressures on Russia, and she’s not happy with the response so far. “I was disappointed to see that some of the so-called crypto exchanges, not all of them, but some of them are refusing to end transactions with Russia for some philosophy of libertarianism or whatever,” she said in an interview.

Just one question with Chris Harmse, co-founder of BVNK

Harmse, who describes himself as having “fallen down the crypto rabbit hole” on Twitter and LinkedIn, is managing director and co-founder of BVNK, a digital assets financial services company.

What fintech trend is most troubling for you?

I wouldn’t say it’s troubling us, but we have a close eye on regulatory developments. When new technologies emerge and authorities look at how to regulate them, they try to fit them in existing frameworks. In the U.S., we’re seeing that this approach is leading to several authorities with different remits staking a claim to regulating the crypto sector. This piecemeal approach is unhelpful.

The situation in Europe is more straightforward with a pan-European Union approach. The EU may not be able to match the entrepreneurial energy of the U.S., but its consistent approach is positive for the sector.


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.

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Thanks for reading — see you tomorrow!

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