Visa, Mastercard and Circle Suspend Services in Russia
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Visa, Mastercard and Circle Suspend Services in Russia

6 months ago

Salman Banaei from Chainalysis has predicted that their decision to shut down access to all Russian consumers "makes it likely that cryptocurrency exchanges will follow suit."

Visa, Mastercard and Circle Suspend Services in Russia

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Visa and Mastercard have announced that they are suspending their operations in Russia — dealing another blow to consumers thrown into economic disarray following President Putin's invasion of Ukraine.

Outside of China, both companies command a 90% market share of credit and debit card transactions — and they have increasingly embraced cryptocurrencies in recent years.

And in other developments, Circle — the issuer of the USDC stablecoin — has quietly announced that it is "temporarily disabling all fiat payments from accounts located in Russia, including payments from cards issued in Russia."

Ukrainian politicians have been spearheading calls for crypto exchanges to ban accounts belonging to all Russian consumers in recent days. However, major trading platforms have expressed reluctance to do so unless they are ordered to by the U.S. government. As well as arguing that it isn't their place to make such a unilateral decision, exchanges also claim it would unfairly punish consumers who are opposed to Russia's actions.

PayPal — which has recently begun allowing its users to buy and sell digital assets in a small number of countries — is also suspending its operations.

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What These Companies Are Saying

On Saturday, Ukraine's Deputy Prime Minister Mykhalio Fedorov shared a letter he had received from PayPal's CEO Dan Schulman. Confirming that access to its services would now be limited in Russia, he wrote:

"PayPal supports the Ukrainian people and stands with the international community in condemning Russia's violent military aggression in Ukraine. Throughout this crisis, we have focused the strength of our donation platform on supporting global efforts to provide humanitarian relief to those suffering in Ukraine and others fleeing for safety."

Visa said that work has begun to cease all transactions within the country over the coming days. This means that cards with the company's branding that were issued by Russian banks won't work outside of the country. Equally, Russian merchants and ATMs will no longer be able to accept Visa cards that were issued around the world. Chief executive Al Kelly said:

"We are compelled to act following Russia's unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed."

A similar statement from Mastercard followed minutes later, adding:

"We don’t take this decision lightly. Mastercard has operated in Russia for more than 25 years."

Although Visa and Mastercard had both moved to limit access to a number of financial institutions in Moscow, this tougher policy is set to have a much bigger impact.

Chainalysis' co-head of public policy Salman Banaei — who spoke to us on this week's CoinMarketRecap podcast — believes the move taken by Visa, Mastercard and Circle "makes it very likely cryptocurrency exchanges will follow suit." On Twitter, he added:

"Extensive sanctioning and rising anti-money laundering risk assessments by virtual asset service providers in cryptocurrency markets could lead to bifurcation of markets. Bitcoin and other cryptocurrency with clean provenance would trade at a price premium."

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