Mykhailo Fedorov, Vice Prime Minister and Minister of Digital Transformation of Ukraine, called on crypto exchanges to block Russian and Belarusian accounts following the invasion of Ukraine. Exchanges like Kraken and Binance pushed back at the demand.

Why should we care?
“We plan to make legal demands. We are preparing letters,” said Yulia Parkhomenko, head of the virtual assets expert group at Ukraine’s Ministry of Digital Transformation of Ukraine. When asked whether such a move would harm Russian and Belarussian citizens who do not support these war efforts, Parkhomenko said: “There is no way to identify who is financing the war and who is not.” If the Ukrainian government’s efforts succeed, then we may see a sea change in how the blockchain is regulated, with wallets and exchanges as nodes susceptible to political intervention. It would also make exchanges a less popular site within the crypto landscape; crypto’s libertarian and decentralized reputation has long worked in exchanges’ favor. Kraken CEO Jesse Powell was quick to respond to Ukrainian demands, saying his platform “cannot freeze the accounts of our Russian clients without a legal requirement to do so.” He had previously told Kraken users to move their crypto off exchanges if they were concerned about enforcement measures; “We cannot protect you,” he said.