Cryptocurrency exchanges and financial services companies will likely not be able to accept transactions via many major credit cards soon as the companies no longer serve Russian users.
On Saturday, Visa, Mastercard and PayPal announced that they would no longer operate in Russia following military action in Ukraine. Visa described Russia's actions as a "baseless invasion". Mastercard said it wanted to support the Ukrainian people with its action. The following day, American Express made a similar announcement, saying the company would cease operations in Russia and Belarus.
Apple Pay and Google Pay are said to have restricted their services to some Russian users . They would not have been able to use the credit cards mentioned above for transactions via the payment apps anyway.
The fact that these three major US credit card companies and others are ceasing operations in Russia has nothing to do with the economic sanctions imposed on certain Russian banks and empires. Coinbase announced on Sunday that it had blocked over 25,000 wallet addresses "associated with Russian individuals or entities that we believe are engaged in illegal activity." At the time of going to press, however, the stock exchange had not yet commented on the measures taken by the credit card companies.
With these changes, an average Russian citizen will no longer be able to use Visa or American Express credit cards for everyday transactions abroad or domestically. Mastercard cards issued by Russian banks are no longer supported by the company's network. Cards from other foreign banks "will not work at Russian merchants or ATMs."
"We do not take this decision lightly," said Mastercard, which has operated in Russia for more than 25 years.
But the Central Bank of Russia issued a statement on Sunday , saying that Mastercard and Visa cards "will continue to function as usual in Russia until their expiry date expires." According to the statement, users should continue to be able to use ATMs and make payments with them. Given the statements made by the credit card companies, it is unclear how the Central Bank of Russia came to this conclusion. But she conceded that cross-border payments and using the cards abroad are not possible.
The companies have not given an exact date when they intend to cease operations. However, at least one cryptocurrency exchange has now warned its users about this change, which will affect many Russian users. On Tuesday, Binance announced that as of Wednesday, the exchange would no longer be able to accept payments with Mastercard and Visa cards issued in Russia. American Express is not accepted there anyway.
Consumers looking to buy cryptocurrencies through an exchange and pay for that trade with a Russian-issued credit card from one of these companies will soon be unable to do so. However, peer-to-peer transactions will still be possible. Reactions to this decision were mixed on social media. Many believe that the credit card companies can help Ukraine by hurting Russia economically. However, this also affects the civilian population, who have nothing to do with their country's military actions.
"Depriving Russian citizens who are attempting to flee Russia of access to their funds is a crime," said Marty Bent , co-founder of crypto mining company Great American Mining. "Visa and Mastercard are digging their own grave by politicizing their products and pushing people around the world towards Bitcoin."
"For people who stay in Russia, the cards continue to work. But you can't leave the country because you can't pay anything," explained Twitter user Inna from Moscow . "Putin gives his OK".
The actions of Visa and Mastercard are a significant blow to Russia and its residents. But it also said the country could move to Chinese payment systems like UnionPay, which are accepted by peer-to-peer cryptocurrency exchange Paxful. The Central Bank of Russia also has its own Mir cards for payments domestically and in nine other countries, including Belarus and Vietnam.
Regulators have not imposed any guidelines on crypto exchanges to prevent Russian users from trading their coins. The US and European Union have indicated that they would keep an eye on whether Russia circumvents sanctions over digital currency transactions . The heads of some crypto exchanges, including Kraken, have said they would not ban Russian users unless required by law.
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