Coinbase Global Inc. (NASDAQ:COIN) on Monday said that the public nature of cryptocurrencies makes them a much better tool for preventing evasion of sanctions than traditional fiat currency.
What Happened: Coinbase Chief Legal Officer Paul Grewal, in a blog post, said that shell companies, tax havens and “opaque ownership structures” allow bad actors to use fiat currencies to obscure the movement of funds and evade sanctions.
The executive at the major U.S. cryptocurrency exchange highlighted that such routes are enabled by traditional financial infrastructures whereas cryptocurrency transactions are public, traceable and permanent — features that governing authorities can leverage to detect and deter evasion.
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The statement follows Bitcoin (CRYPTO: BTC) reaching prices 40% higher in Russia when compared to western markets as more people in the country turn to cryptocurrencies to find ways around global sanctions enforced against the country, which has now been cut off from the SWIFT payment network.
Grewal also pointed out that actors aiming to circumvent sanctions would find cryptocurrencies impractical since they would need “virtually unobtainable amounts of digital assets.” He said, “trying to obscure large transactions using open and transparent crypto technology would be far more difficult than other established methods.”
Coinbase itself is leveraging the nature of blockchain technology to prevent being exploited for sanctions evasion, he said. Some of the measures include blocking access of flagged entities during the signup, detecting evasion attempts and anticipating threats through blockchain analytics.
Grewal, in the same blog post, also noted that Coinbase on Monday blocked over 25,000 addresses related to Russian individuals or entities it believes “to be engaging in illicit activity,” many of which, he said, the exchange identified through its own “proactive investigations.”
Price Action: Coinbase stock traded 3.28% lower at $160.32 in the pre-market session on Monday.
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