Switzerland Plans to Freeze Cryptocurrencies Owned By Russians

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According to a report on Friday by the Financial Times, the Swiss federal government plans to freeze cryptocurrencies belonging to Russian citizens and businesses located within the borders of Switzerland.

The seizure of cryptocurrencies follows sanctions already imposed by the European Union in response to Russia’s invasion of Ukraine.

As reported by the Financial Times, Swiss Finance Minister Guy Parmelin says 223 Russians, including close associates of President Vladimir Putin, have seen their bank accounts in Switzerland frozen, as well as other investments.

The cryptocurrency seizures are an additional initiative by Switzerland on top of EU sanctions.

As to how large the cryptocurrency market in Switzerland is, there are no specific figures, however there are several Swiss banks that have given investors access to buy cryptocurrencies, Bitcoin Suisse which has a large clientele, and of course custodian services which are several within Swiss borders.

A senior finance ministry official tells the Financial Times that the seizures of cryptocurrency assets were necessary because Switzerland wants to protect the integrity of the cryptocurrency industry.

According to a report by CV VC, a Swiss venture capital firm, as of December 2021, some 1,128 blockchain companies were based in Switzerland or the neighboring principality of Liechtenstein.

Earlier, the European Union announced plans to crack down on Russia’s ability to evade financial sanctions using cryptocurrencies.

“We are taking measures, in particular on cryptocurrencies and circumventing the economic sanctions decided by the 27 EU countries”.

Ukraine’s calls on the Coinbase and Binance exchanges to ban access to cryptocurrencies to Russian citizens have ideologically highlighted an aspect that may be questioned today.

Namely that cryptocurrencies have no borders. While an exchange can freeze or restrict access, cryptocurrencies held in an open-source digital wallet would be very difficult to confiscate unless its holders try to move the cryptocurrencies to a centralized exchange.

Coinbase Has Fallen

Coinbase says it is currently blocking 25,000 cryptocurrency addresses linked to Russians or entities, defending itself against claims that Russia could evade sanctions with cryptocurrencies.

In a blog post published yesterday, chief legal officer Paul Grewal described how the financial exchange is complying with the new rules imposed amid the ongoing invasion of Ukraine.

This includes using “sophisticated blockchain analytics” to identify accounts indirectly linked to blocked users.

Coinbase said that the 25,000 blocked accounts “were associated with Russian individuals or entities that we believe are involved in illegal activity”.

It did not specify exactly when they had been blocked or how many of the restrictions were related to current sanctions – in one example, for example, Coinbase cited a 2020 sanction against a specific Russian national with 1,200 potential linked accounts.

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