Ari Redbord, Head of Legal and Government Affairs at TRM Labs, discusses how Binance, Coinbase and Kraken's decision to not unilaterally ban all Russian users from their platforms could put a dent in the West's plan to economically punish Russia. 

Closing Bell

Crypto Market Could Weaken West's Sanctions Against Russia

So while we're seeing the West place economic sanctions on Russia and effectively cut the company off from various financial avenues the country, several crypto platforms are not implementing similar measures. So, despite calls for a blanket ban by Ukraine's Vice Prime Minister exchanges, like finance, coin base cracking each site. Economic freedom is part of their reasoning to continue allowing Russian citizens to use their platforms. Joining me now is airy Red board ahead of legal and government affairs at TRM labs, Blockchain data company helping financial institutions and governments fight fraud, money laundering and financial crime. ErI thanks so much for coming on the show. Each of these exchanges, we just mentioned specifically speaking to why they're not banning Russian users. What is it about crypto that the industry is playing by different rules, Kristin, first of all, thank you so much for having me today. Um look, I think that that in order to really understand sort of and get get into this question, um it's critical to understand sort of what sanctions or what the sanctions over the course of the last week do, and really, even more importantly, what they don't do, what they do is essentially, they sanction Russian banks, the top Russian banks in order to cut those banks off from the U. S. Financial system and the global financial system to basically cut them off from what we call correspondent banking, they the the the sanctions sanctions in the central bank of Russia, um freezing accounts potentially and blocking assets. They also go after specific individuals in Putin's inner circle, you know, certain elites who are now sanctioned under the latest sanctions coming out of the White House. One thing that's really, really important in the context here is what they don't do. This is not what I would say, sort of a full blocking or blanket of sanctions on the entire country. They are not sort of going after, you know, average Russian individuals who are not being sanctioned. Uh and we've done this before, there are full blah kings of countries like Iran, North Korea Sudan, um that is not what's happened here. So hopefully that's some context, because what we're now seeing in terms of the Cryptocurrency businesses in the space is they're saying, look, we have robust compliance controls in place. And it's really also important to mention that any US exchange or an exchange that does business with US persons is regulated by the US Treasury Department. And what that essentially means is that they have to have sanctions compliance programs in place. And they do that include, you know, compliance professionals, training policies and procedures, They use transaction monitoring solutions like TRM labs in order to mitigate the risk of sanctions exposure. They have these in place. And I think what they would say today is, hey, we have all of these protections in place. We are aggressively using them in order to enforce the sanctions, the recent sanctions, but we are not required to cut off average Russians who happened to own wallet addresses at our exchanges, they are really not sort of part of what the US government and really the global government has been doing so far, which has really been focused on the financial sector. Here's the question area, as crypto does look to go more mainstream and is still awaiting regulatory approval of crypto trading assets like a spot Bitcoin, E T F, for instance, is a move like this effectively bullish or bearish for the space. I think some people might feel uncomfortable perhaps investing if this is the case, others might find it as a good opportunity collectively on net. What would you say? It's good or bad? You know? Look, I think this is a real opportunity for the crypto industry. These sort of large, compliant exchanges that you sort of mentioned earlier to really come out and say, look, this is what we are doing in the compliance space. And that's really important because you want to meet your regulatory obligations. You want to use tools like TRM you want to ensure that there is not, you know, illicit activity flowing through your exchange, but it's also because what we're doing is we're building the trust layer for Cryptocurrency, you know, anti money laundering and stopping bad actors is foundational infrastructure and I think a that needs to be done here, and it is, and be it needs to be messaged and that is very bullish for the crypto industry. Look at the end of the day, as you're building a new financial system, as, as, you know, as we are, you need trust in the financial system and you want to make sure it's not being abused by, you know, sanctioned Russian actors. And it's really, really important in this moment to ensure that we have the strictest compliance capabilities possible, um, in order to stop this from happening. And that is very good for the overall crypto economy. Interesting. Well, another question that I have is Russia is buying, people in Russia are buying more Bitcoin would make sense. It's the most valuable Cryptocurrency out there, but I'm also reading they're buying tether, another Cryptocurrency, not as well known for instance as Bitcoin, what specifically makes that Cryptocurrency tether attractive to Russian buyers. You know, it's interesting, look, you know, I think we're in this moment where um, you know, crypto, you know, it could be, is really being used, sort of in two ways, potentially in Russia Ukraine in the world and that is sort of, we're seeing the promise of people engaging with cryptocurrencies really, whatever they are, we've seen this explosion of digital assets, you know, over the course of the last, you know, a few months in year. Um, I think people are out there saying, hey, you know, look as we're seeing hyperinflation, potentially in Russia, as we're seeing, um, you know, massive sanctions on this regime. What are the safest places and sort of the best best places to burrow currency right now, obviously you have Bitcoin And look, you have other other crypto assets as well that I think could be useful for all kinds of different reasons. Cherry Red Board, ahead of legal and government affairs at TRM Labs. Airy, thanks so much for coming on the show. We appreciate it.