Cryptocurrencies are regulated by laws and centralized exchanges are mandated to comply with these laws or risk being shut down. The latest of these regulations are sanctions placed on Russian crypto investors with wallet values greater than $10,000.
Binance CEO Changpeng “CZ ” Zhao said the exchange’s recent restrictions against Russian users came from compliance with sanction rules. He added that crypto exchanges must comply with “all sanctions.”
CZ’s comments come after Binance on Thursday rolled out severe restrictions on Russian users, blocking all wallets with a value of more than $10,000. While the restrictions were in line with new European sanctions against Moscow, they also contrasted previous comments from CZ that the exchange would not block ordinary people.
But Binance has repeatedly affirmed that it will comply with sanctions.
CZ says Binance remains committed to following sanctions
Commenting on Binance’s recent Russia crackdown, CZ said the exchange and its peers must follow new and existing sanction rules. He also said that a crypto exchange should not have the power to unilaterally freeze a nation’s user accounts.
Binance gave its word to the global community that we would implement any and all sanctions actions, and we are living up to that commitment.
The world’s largest crypto exchange had earlier this year rejected calls from Ukraine and other countries to block Russian users.
So far, sanction laws had allowed the exchange to continue servicing ordinary Russians. But with new crackdowns on asset transfers with Russian entities, crypto exchanges will have to introduce curbs affecting ordinary users.
Other crypto exchanges are yet to comment on the new round of sanctions.
The problem with centralized exchanges
Binance’s latest move against Russia highlights a major concern with centralized exchanges, in that they are privy to regulation. This has been a point of contention for the crypto community, given that deregulation and decentralization is among its core tenets.
Critics argue that keeping tokens on a centralized exchange does not actually entail ownership of those tokens. The notion of “not of you keys, not your coins” comes from this sentiment.
Earlier this year, a crackdown on Bitcoin donations to a protest in Canada had also spurred a similar sentiment, where centralized wallets were the first to be targeted by authorities.
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