"If they are using crypto services — funds, exchanges and so on — these service points we can target," a finance ministry official told the Financial Times.
Switzerland has announced that it intends to freeze all cryptocurrencies that are owned by Russians within its borders.
This goes beyond the sanctions that have been introduced by the European Union in Brussels.
According to the newspaper, a senior official in the Swiss finance ministry acknowledged that there would be challenges enforcing this policy, and said:
"If someone holds their crypto key themselves then, wherever they are, it's going to be virtually impossible to identify them. But if they are using crypto services — funds, exchanges and so on — these service points we can target."
Major crypto exchanges perform Know Your Customer checks on users — which usually include identity verification. The industry's biggest trading platforms have also confirmed that they prepared to freeze the accounts of Russian individuals and entities who are subject to sanctions.
The co-head of public policy at Chainalysis — a blockchain intelligence firm that has been working closely with crypto exchanges — told the CoinMarketRecap podcast last Friday that no specific wallet addresses have been sanctioned so far, but this has happened in the past.
A Fast-Moving Situation
Away from Switzerland, it seems that many trading platforms will only move to ban all Russian accounts if they are ordered to by the U.S. government. But in a thread last week, he warned Kraken consumers who are in the country that such a requirement could be imminent.
Doubling down on his assertion that sanctions shouldn't be used to target the entire population with a broad brush — despite the West arguing that this is a necessary tool to pressure Vladimir Putin into ending the Ukraine invasion — Powell wrote on Sunday:
"Blocking trade with Russians is bad. Russians aren't going to rise up to stage a coup. What's going to happen is everyone who relied on international trade — artists, devs, lawyers — will become dependent on the state, maybe even take jobs supporting the invasion in order to eat."
Just a few days ago, the Swiss city of Lugano had announced that it was making Bitcoin "de facto" legal tender, alongside the Tether stablecoin. This latest policy could damage Switzerland's reputation as a crypto-friendly nation in the eyes of some investors, who argue that such restrictions go against the decentralized nature of digital assets.
Experts maintain that Russia is unlikely to use cryptocurrencies to evade sanctions on a mass scale. Not only is the market for digital assets too thin, but transactions are easy to trace — and achieving an off-ramp to fiat could prove difficult.