With Visa<\/a> and Mastercard<\/a> pulling out of Russia, the two easiest and most convenient ways to make payments with bitcoin \u2014 really the only two easy and convenient ways to make day-to-day payments with any cryptocurrency \u2014 have vanished.<\/p>\n This makes it is far harder to use crypto as anything other than an investment in Russia as its economy implodes under the weight of both public and private sanctions.<\/p>\n Crypto debit cards remain the only effective way to turn even the best known and most widely accepted virtual asset into something usable at retail merchants and websites. And even in those cases, you are rarely paying with crypto. Instead, the card issuer is selling it for you and paying the merchant in the local fiat currency as part of a single transaction.<\/p>\n The same applies to PayPal<\/a>, the first major payments processor to pull out of the country on its own rather than as required by formal sanctions \u2014 but only in a theoretical sense as it had not yet enabled crypto payments in Russia.<\/p>\n This means two things: First, you have moved your bitcoin into the traditional financial system rather than using it as a way to opt out of its intended use \u2014 as \u201ca purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution,\u201d according to the first line of the Bitcoin whitepaper<\/a> that launched cryptocurrency and other blockchain technologies.<\/p>\n Second, it means that the merchant likely does not even know you are paying in bitcoin, which in turn means there is no impetus to consider even looking into other ways of integrating an API that lets them accept crypto at the point of sale \u2014 why go to that trouble if the demand is not (as far as they know) there?<\/p>\n It\u2019s noteworthy that Discover card hasn\u2019t pulled out as well. They franchise their Diners Club network to banks; Russia is a big franchisee, and franchises are very hard to control.<\/p>\n Russia has made clear that internally issued Visa and Mastercard cards will continue to work through an alternative payments processor, which doesn\u2019t help crypto users of non-Russia issued crypto debit cards.<\/p>\n Alternate Routes<\/strong><\/p>\n That\u2019s not to say that crypto has no value as a currency in Russia.<\/p>\n For one thing, even if the major cryptocurrency exchanges like Binance, Coinbase and Kraken do pull out \u2014 and many have made very clear they will continue to resist Ukraine\u2019s pleas for them to shut off all Russian accounts, not just sanctioned ones, unless legally required to do so \u2014 there are other avenues to turn crypto into cash.<\/p>\n See also: Citing Libertarian Values, CEOs of Crypto Exchanges Won\u2019t Cut Off Russian Customers<\/a><\/strong><\/p>\n One obvious answer is that as sanctions bite, more and more merchants will be willing and even eager to accept bitcoin or other cryptocurrencies that can be turned into hard currency. Certainly that is happening in Venezuela as the bolivar\u2019s collapse made any currency not undergoing hyperinflation desirable.<\/p>\n Related reading: Bitcoin Daily: Venezuela’s Simon Bolivar Int’l Airport to Accept Crypto for Flights<\/a><\/strong><\/p>\n Another is that there are informal ways to exchange crypto \u2014 giving someone a flash drive, for example. Mixing services and privacy coins would make it easy for somewhat sophisticated crypto users to get around sanctions and \u201cwash\u201d crypto bought for fiat currency in Russia.<\/p>\n More here: PYMNTS Crypto Crime Series: When Privacy Counts, Crypto Users Turn to Mixing Services<\/a><\/strong><\/p>\n Financial institutions in a sanctioned country could also assist in the process.<\/p>\n Beyond that, not all countries \u2014 most notably China \u2014 have sanctioned Russia.<\/p>\n Then there\u2019s decentralized finance, or DeFi, exchanges that have no centralized management and cannot effectively be forced to do so, even by legal full-blockade sanctions that have not yet been imposed.<\/p>\n These decentralized exchanges, or DEXs, are run by decentralized autonomous organizations (DAOs) that are controlled by users voting with governance tokens. They have no centralized management or managers, and are (generally) not licensed by any jurisdiction, meaning there is no one that can be threatened with legal consequences for failing to impose sanctions.<\/p>\n
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