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​Legalization of cryptocurrencies in Ukraine, new sanctions against Russians and other key events of the week

18.03.2022 - 10:45


8 min

The bitcoin exchange rate has been relatively stable over the past seven days, hovering around the $40 000 mark. The cryptocurrency’s highest price this week was recorded on March 16 at $41 465, while the lowest was on March 14, when the value of a single coin dropped to $37 728 (according to the CoinMarketCap portal). As of Friday morning March 18, the price of bitcoin stands at $40 580, up 3,64% in the past 7 days.

The second-largest cryptocurrency by capitalization, Ethereum, is up 6,86% for the week. The native token of the Binance cryptocurrency exchange (BNB) rose by 3,47%.

The total capitalization of the crypto market rose from $1,769 trillion to $1,819 trillion for the week, with bitcoin dominating 42,4%. Ethereum’s share is 18,4%. As can be seen on the infographic of the Coin360 portal, most of the assets are in the green zone.

Source: Coin360

New sanctions against Russian users

On March 11, the UK supervisory authorities obligedcrypto companies to comply with sanctions against the Russian Federation. Any attempt to evade the new rules will be considered a criminal offense.

A similar directive was sent to the representatives of crypto platforms by the Japanese government. The local authorities have banned the processing of transactions subject to sanctions to freeze the assets of Russian and Belarusian users. The violations of these requirements face fines or imprisonment of up to 3 years.

Some global companies have refused to block all Russian users. For example, the Bitfinex exchange said that it will not freeze the accounts of Russians who are not under sanctions. The platform’s representatives stated that blocking ordinary citizens is unfair. And the co-founder of the Ethereum mixer Tornado Cash motivated the impossibility of imposing restrictions by the decentralization of the service. The smart contracts system makes a third-party intervention in the system simply not technically possible, Roman Semenov explained.

In response to the imposed sanctions, the Russian authorities are considering the possibility of creating Russian regulated crypto exchanges. This was stated by State Duma Deputy Alexander Yakubovsky, who is part of a working group on cryptocurrency regulation.

I am sure it can open Russia access to the financial market, which they are now trying to close. In addition, the competent development of digital financial assets will minimize the damage from sanctions against the country,” Yakubovsky concluded.

News of Russia’s Central Bank: SberBank licensing and a new decree for financial institutions

SberBank has received a license from the regulator to issue and exchange cryptocurrencies on its blockchain platform. This move, according to Sergey Popov, director of the Transaction Business Division of SberBank, should cushion the impact of anti-Russian sanctions on the economy.

The record and issuance of digital financial assets will take place in an information system based on distributed ledger technology. SberBank introduced its blockchain back in September 2021, but without a license from the Central Bank, it could not be launched. According to Popov, the legal entities will be able to make their first transactions on the platform in a month.

On March 17, it also became known that the Central Bank of Russia had instructed all financial institutions to implement strict controls over transactions involving digital assets.

Banks will have to pay attention to suspicious transactions involving customers’ digital assets, such as the withdrawal of capital abroad with cryptocurrencies. If suspicious transactions are detected, the regulator recommends paying close attention to the customer’s transactions and conducting thorough due diligence on the laundering of proceeds from crime.

The decree also provides for a ban on the use of cryptocurrencies for the withdrawal of assets abroad.

Legalization of cryptocurrencies in Ukraine

On March 15, Ukraine’s President Volodymyr Zelenskyy signed the law “On Virtual Assets.” The document set out the rules for the operation of market participants, taxation, income declaration, and interaction with regulators.

After the adoption of amendments to the Tax Code of Ukraine, the sphere of crypto assets will operate in a completely legal field. However, digital currencies still cannot be used as a means of payment and exchanged for goods or services. Cryptocurrencies are equated to an intangible benefit, which has a value and can be expressed in electronic form. The regulation of the crypto market will be entrusted to the National Bank of Ukraine and the National Securities and Stock Market Commission.

Ethereum news: 2 million coins burned and the final testnet launched

By March 14, the Ultrasound service recorded the burning of about 2 million Ethereum coins ($5,6 billion at the exchange rate on March 18) as part of the EIP-1559 upgrade. The burning of coins on the Ethereum network began last August after the activation of the EIP-1559 upgrade, one of the components of London. Before the London upgrade, the fee in ETH was formed on the auction principle. Miners have always added to the blocks and confirmed those transactions whose initiators make a higher fee. The users had to pay fees to the miners to conduct fast trading operations. After the EIP-1559 upgrade, some of the fees started to be burned, leading to the deflation of ETH.

In addition, on March 14, one of Ethereum’s developers, Tim Beiko, announced that the final test network was launched on the network before switching to the PoS algorithm. If the Kiln test network is successful, the blockchain will switch to PoS as early as summer 2022.

European Union will not ban PoW cryptocurrencies

This week, the European Parliament held an important vote for the crypto community on the issue of banning cryptocurrency mining based on the Proof-of-Work (PoW) consensus algorithm. The law was first proposed in September 2020 and included a ban on “environmentally unsustainable consensus mechanisms.” Cryptocurrencies with high energy consumption when mining, including Bitcoin, Ethereum, and Dogecoin, fell under this definition.

On March 14, the Committee on Economic and Monetary Affairs of the European Parliament voted against the ban, reducing the community’s concerns about the introduction of further restrictions on the operation of PoW cryptocurrencies within the European Union.

UAE continues to attract crypto projects

This week, two major platforms received a license to operate in the UAE. The FTX exchange became the first. The company plans to open a regional headquarters in Dubai and offer crypto derivatives products in institutional markets.

Binance, the world’s largest exchange by trading volume, also announced about obtaining a license to operate in Dubai and Bahrain on March 14. The permission to operate in Bahrain has been granted by the country’s central bank. The license will allow Binance to provide crypto services throughout the kingdom. As for the Emirate of Dubai, the platform will become the leading representative of the crypto industry in the World Trade Center’s free economic zone (FEZ).

Other industry news

The number of active bitcoin addresses has risen. This week, IntoTheBlock’s analysts reported 40 million wallets storing BTC on their balance sheet. Since the beginning of 2022 alone, 888 000 new users have joined the network.

Meta (ex-Facebook) founder Mark Zuckerberg announced the integration of NFT into the social network Instagram at the South by Southwest conference. Meta has not yet revealed a timeline for the new functionality. The author for the Platformer portal Casey Newton, who attended the event, writes that this may happen within the next few months.

The representatives of the Metamask cryptocurrency wallet announced the release of its own token and the launch of a decentralized autonomous organization (DAO). According to ConsenSys CEO Joe Lubin, the wallet’s developers aim to progressive decentralization while keeping the priority on ensuring the safety of users.


Michael Golikov Michael Golikov

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