Bitcoin, Ethereum And Crypto On The Frontline Of Financial Warfare As Extreme Price Swings Hit

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High alert ⚠️

Cryptocurrency prices are sinking following a hectic weekend of Russian sanctions that’s pushed the world toward nuclear war. The bitcoin price is down almost 3% on this time yesterday as traders count the cost of some Russian banks being booted from the SWIFT interbank messaging service and the country’s central bank having its foreign reserves seized. See below for a full situational rundown.

Ethereum has dropped over 6%, leading the major crypto market lower. Ethereum rival solana is a sole climber, adding almost 1%, while avalanche, a newer challenger, has lost over 7%.

Crypto prices and markets broadly are set for another volatile week as the war in Ukraine rolls on and the full effect of Russian sanctions are felt.

Now read this: Borderless crypto markets show need for global rules

The frontline of financial warfare 🪖

Russian bear roars: The Bank of Russia has hiked its key interest rate to the highest in almost two decades and imposed capital controls in a desperate bid to protect the Russian economy from tough new sanctions that will remove the country from the interbank messaging network SWIFT and “paralyze” assets of the Russian central bank. Russia’s president Vladimir Putin responded to what he called “aggressive statements” from the West by putting Russia’s nuclear forces into a “special regime of combat duty.” Meanwhile, Washington is considering a crypto crackdown as part of sanctions against Russia, it was reported by the Wall Street Journal on Friday.

Market mayhem: Traders are on the edge of their seats this morning with former Russian Central Bank deputy chairman warning over the weekend of “catastrophe” on the Russian currency market. Overnight, the Russian ruble collapsed to a record low against the dollar. It’s been announced this morning the Moscow stock exchange will not open today, however, the London-listed major Russian bank Sberbank has seen its stock price collapse, now down nearly 95% since October.

– Russia’s Sberbank in Europe faces closure after savers demand money

Give peace a chance: This morning, Ukraine and Russia are set to begin peace talks with “no preconditions” near the Ukrainian-Belarusian border.

Freeze them out: “I’m asking all major crypto exchanges to block addresses of Russian users,” Ukraine’s vice prime minister posted to Twitter on Sunday. “It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.” Dmarket, a Ukrainian digital assets and non-fungible token (NFT) trading company said it would do so. “The registration on the platform is prohibited for users from Russia and Belarus,” Dmarket tweeted. “Accounts of previously registered users from these areas are frozen.” Ukraine’s vice PM then said the frozen funds could be “donated to the war effort.”

– Tech CEO flies workers out of Ukraine as fear of invasion looms

The slippery slope of censorship: However, the chief executive of U.S. crypto exchange Kraken, Jesse Powell said it won’t freeze the accounts of our Russian clients without a legal requirement to do so but warned “such a requirement could be imminent.” Powell added: “Besides, if we were going to voluntarily freeze financial accounts of residents of countries unjustly attacking and provoking violence around the world, step 1 would be to freeze all U.S. accounts. As a practical matter, that’s not really a viable business option for us.” Spicy. Binance, the world’s largest crypto exchange, has also said it won’t be freezing user accounts in Russia. “We are not going to unilaterally freeze millions of innocent users’ accounts. Crypto was meant to provide greater financial freedom for people across the globe,” the representative told Reuters.

What else is being said: Business Insider has pulled together tweets from FTX’s Sam Bankman-Fried, Microstrategy’s Michael Saylor, cardano founder Charles Hoskinson, cofounder of Morgan Creek Digital Anthony Pompliano and crypto trader Scott Melker on bitcoin and crypto’s role in the war. The shocking consensus: Crypto fixes this.

Ukraine’s crypto crowdfund: Since beginning to accept bitcoin, ethereum and tether donations on Saturday, the Ukraine government has raised almost $8 million in cryptocurrencies, according to blockchain analysis company Elliptic. Reuters has a write-up.

Bitcoin bribe: Russian soldiers surrendering to Ukraine will receive 5 million rubles ($45,000) worth of crypto or cash, Masha Efrosinina, a local TV host and honorary ambassador of the United Nations Population Fund in Ukraine, said in an Instagram post, claiming the offer comes from The Ministry of Defense of Ukraine and the global IT community.

There’s a meme war on for your mind: It’s not just a digital finance war being waged on Russia. The internet’s meme machine has been powered up to fight the Russian war machine. Privacy lawyer Whitney Merrill has put together some examples in a Twitter thread.

Good to know: New Yorkers are locked out of a crypto coin made just for them

Europe is coming for crypto 🌍

💷 The U.K.’s plans to crack down on the flow of “dirty money” into the country with a new economic crime bill that will include greater powers to seize cryptocurrencies, according to a Financial Times report.

🕵️ The reforms are a fresh rebuke to Russia’s president Vladimir Putin following the invasion of Ukraine and will require foreign owners of companies to reveal their identities to prevent criminals from concealing funds behind shell companies.

🇪🇺 Meanwhile, European Central Bank president Christine Lagarde said the European Union needs to move quickly to approve cryptocurrency regulation that prevents Russia from evading sanctions after invading Ukraine, it was reported by Bloomberg. Elsewhere, the European Commission last week released its proposal for the union’s new Data Act which includes a demand that applications using smart contracts include a “kill switch,” The Block reported.

Now read this: China, Russia and the race to a post-dollar world

The week ahead 📆 

👀 Keep an eye out for these cryptocurrency and crypto-related events this week.

✍️ We’re still waiting for the Biden administration’s long-awaited crypto oversight executive order. Reports had suggested it would be signed last week but Russia’s invasion of Ukraine apparently got in the way.

🗳️ The United Nations General Assembly is holding an emergency session over Russia’s invasion of Ukraine today. The UN Human Rights Council will also kick off its 49th session in Geneva.

🤳 Phone and mobile device makers are descending on Barcelona for Mobile World Congress which returns today after a two-year pandemic-induced hiatus. The Verge has a primer. Telefonica chairman Jose Maria Alvarez-Pallete said this morning that the metaverse is already delivering “mindblowing disruption,” a skeptical CNBC reporter tweets.

🗣️ U.S. president Joe Biden will deliver the annual State of the Union address to a joint session of Congress in Washington tomorrow. Foreign policy will be “front and center,” according to the Wall Street Journal.

🎤 Federal Reserve chair Jay Powell will speak twice this week, on Wednesday and then Thursday, in what are likely to be his final public remarks on monetary policy before the U.S. central bank begins raising interest rates to counter soaring inflation. Powell will first deliver his regular monetary policy update to the U.S. House Financial Services Committee and then appear before the Senate Banking Committee.

💼 Friday brings the latest U.S. jobs report with economists forecasting the U.S. labor market will continue to improve following the massive near-500,000 increase in January.

🧧 This weekend, China’s National People’s Congress begins its annual plenary session in the Great Hall of the People in Beijing, expected to will lay out major policies involving the economy, trade, diplomacy and the environment. The South China Morning Post has an explainer.

Good to know: Bitcoin is getting even dirtier