Russia

The past 24 hours has been kind to privacy coins, with many seeing gains of over 20 percent amid concerns about the regulatory environment in the US, a crackdown by exchanges on accounts linked to Russia, and ongoing economic sanctions.

Someone noticed this privacy coins and exploded all of sudden ✨ 💥 #xmr #monero #zec #xvg #zen #dash #Bitcoin pic.twitter.com/w2hROKyPMw
— Chets #Metaverse (@chets777) March 9, 2022

Privacy coins 👀
— Blockchain Backer (@BCBacker) March 8, 2022

Monero, the largest privacy coin by market cap, shot up 22 percent in under three hours according to CoinGecko, peaking at almost US$206 before consolidating around the US$185-190 range.

Likewise, Zcash is up over 30 percent since March 8, having climbed from US$106 and is currently trading at close to US$145, according to CoinGecko. This rally from Zcash follows a significant bounce in November 2021 after the announcement of plans to transition to a proof-of-stake blockchain.

Smaller Privacy Coins Also Up

The surge in privacy coins hasn’t been limited to the large caps; most smaller plays are also up significantly in the past day: Oasis has gained 10.4 percent, Secret is up 14.5 percent and Horizen 17 percent.

Even low-cap and relatively unknown privacy protocols are surging: Pirate Chain is up 18 percent, Tornado Cash 32.7 percent and Verge by 25 percent, all in the past 24 hours.

What Caused the Surge?

Opinion is divided on what exactly has sparked this sudden surge in privacy coins, and there are likely several factors at play.

The release of the crypto executive order by President Biden, with its focus on consumer protection and illicit activity along with the suspension by Coinbase of over 25,000 addresses linked to Russian criminals, are thought to be important factors.

There is also some speculation that Russian oligarchs may be buying up privacy coins to help them get around economic sanctions while maintaining their anonymity:

I regret not buying privacy coins in the last few days.

It was so obvious given all the sanctions that some of these oligarchs would buy them, smh
— Sachika-chan 🌸 (@sachikainvests) March 9, 2022

To put the surge in privacy coins in context, according to CoinMarketCap the overall crypto market cap is up around 4 percent over the past 48 hours.

Mykhailo Fedorov, Ukraine’s vice prime minister and minister of digital transformation, has requested that major crypto exchanges block the addresses of Russian and Belarusian users. Ukraine is now preparing to make legal demands to ensure its pleas are acted on:

I'm asking all major crypto exchanges to block addresses of Russian users.

It's crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.
— Mykhailo Fedorov (@FedorovMykhailo) February 27, 2022

Fedorov has written to eight prominent cryptocurrency exchanges voicing the request in the hope of blocking some of Russia’s potential military funding: “It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians but also to sabotage ordinary users’ [access],” Federov later tweeted:

Ukrainian crypto community is ready to provide a generous reward for any information about crypto-wallets of Russian and Belarusian politicians and their surroundings. War crimes must be pursued and punished! To share info please contact in Telegram: https://t.co/XHidwUQ8bE.
— Mykhailo Fedorov (@FedorovMykhailo) February 26, 2022

Demands Require Legal Backing

Ukraine has promised “generous rewards” for anyone with information about the crypto wallets of Russian and Belarusian politicians. The vice prime minister’s ministry then turned its attention to Coinbase, Binance, Huobi, Gate.io, Whitebit, KuCoin, Bybit, and Kuna to address them directly. However, Jesse Powell, co-founder and CEO of Kraken, explained why blocking these users without the backup of legal demands was not possible:

1/6 I understand the rationale for this request but, despite my deep respect for the Ukrainian people, @krakenfx cannot freeze the accounts of our Russian clients without a legal requirement to do so.

Russians should be aware that such a requirement could be imminent. #NYKNYC https://t.co/bMRrJzgF8N
— Jesse Powell (@jespow) February 28, 2022

Powell argued that, while Kraken maintains its anti-war stance, blocking users would infringe on what crypto stands for:

https://finance.yahoo.com/news/insulting-kraken-ceo-refuses-comply-154447927.html

The People’s Money is an exit strategy for humans, a weapon for peace, not for war.
Jesse Powell, Kraken CEO and co-founder

In addition, Coinbase has refused to implement Fedorov’s request, saying:

Our mission is to increase economic freedom in the world. A unilateral and total ban would punish ordinary Russian citizens who are enduring historic currency destabilization as a result of their government’s aggression against a democratic neighbor. We remain vigilant as this invasion evolves and are deeply committed to playing our part.
Coinbase statement

Ukraine Embraces Cryptocurrency

Ukraine as a nation has opened its arms to cryptocurrency. In September 2021, draft legislation was passed with the intention to legalise and regulate bitcoin. The purpose of the bill is to protect those who own and trade in bitcoin.

Since the beginning of Russia’s military invasion, Ukraine has had the support of crypto users from around the globe. As of early March, US$37 million had been donated to both the Ukraine government and non-governmental organisations.