“By politicizing their products and pushing people all over the world toward Bitcoin, Visa and Mastercard dig their own coffins,” Marty Bent stated.
Following the companies discontinuing operations for Russia-based users, cryptocurrency exchanges and financial services companies will likely no longer be able to accept transactions completed with many major credit cards.
Following Russia’s military actions in Ukraine, Visa, Mastercard, and PayPal stated on Saturday that they would be halting operations in the nation. Visa described Russia’s actions as a “unprovoked invasion,” while Mastercard stated that its decision was made to support the people of Ukraine. The next day, American Express made a similar announcement, announcing that it would cease business in Russia and Belarus.
Some Russians are reportedly denied access to Apple Pay and Google Pay, while users are unlikely to be allowed to use the aforementioned credit cards for transactions on the payment apps.
We are grateful to @Dan_Schulman for #StandingwithUkraine and for suspending business in russia. It makes a huge difference. @PayPal we welcome you in Ukraine! Your presence will provide more financial freedom to 40 million of Ukrainians in these difficult times.
— Mykhailo Fedorov (@FedorovMykhailo) March 8, 2022
Three big American credit card companies and others appeared to have made their decision to suspend operating in Russia independently of efforts to comply with economic restrictions imposed on particular Russian banks and rich individuals. Coinbase reported on Sunday that it has blacklisted over 25,000 wallet addresses “connected to Russian persons or entities we think are participating in criminal activities,” but had not addressed the credit card ban as of publication.
Following the changes in the firms’ regulations, ordinary Russians who use Visa or American Express credit cards for routine purchases, whether overseas or within the nation, would appear to be unable to do so. Russian bank-issued Mastercard cards would no longer be supported by the company’s network, while foreign bank-issued cards “will not work at Russian shops or ATMs.”
Mastercard, which has been operating in Russia for more than 25 years, stated, “We don’t take this decision lightly.”
On Sunday, Russia’s central bank said both Mastercard and Visa cards would “continue to work in Russia as usual until their expiration date,” allowing users to use ATMs and make payments. Given the claims from the credit card companies, it’s unclear how the Central Bank of Russia came to this judgement, although it did acknowledge that cross-border transfers and using the cards in person overseas would be impossible.
Though the companies did not give a specific date for when their activities would end, at least one cryptocurrency exchange sent a warning to users about the change, which is expected to affect many Russian users. Binance stated on Tuesday that beginning on Wednesday, the exchange would no longer be able to accept payments from Russian-issued Mastercard and Visa cards – the firm does not accept American Express.
This is out of our hands. Not our decision. https://t.co/K3mH75Ul3B
— CZ 🔶 Binance (@cz_binance) March 8, 2022
Consumers who want to buy crypto with a credit card issued in Russia from one of these companies will most likely be unable to do so shortly, while peer-to-peer transactions should still be possible. On social media, there were varied reactions to the decision, with many suggesting that credit card firms could help Ukraine by causing economic harm to Russia, but at the price of citizens who had no say in their country’s war operations.
“It’s a crime to deny Russian nationals attempting to exit Russia access to their money,” said Marty Bent, co-founder of crypto mining company Great American Mining. “By politicizing their products and pushing people all over the world toward Bitcoin, Visa and Mastercard are digging their own graves.”
“The cards keep working for someone staying in Russia, but you can’t leave because you won’t be able to pay for anything,” stated Twitter user Inna, who claimed to be from Moscow. “Putin likes it.”
As I warned about two weeks ago. #crypto is only the way. #visa Ana #Mastercard just showed the world how unstable, unrelated, centralized and political they are by abandoning Russian people that are so far from the war and Russia as it is possible. This is a modern fascism. https://t.co/wnHEtoKO0J
— Anti Danilevski (@AntiDanilevski) March 6, 2022
While the loss of Visa and Mastercard appears to be a huge blow to Russia and its citizens, rumors suggest that the country may resort to Chinese payment systems such as UnionPay, which is accepted by Paxful, a peer-to-peer bitcoin exchange. The Russian central bank also has its own Mir cards, which may be used to make payments in Russia and nine other countries, including Belarus and Vietnam.
Crypto exchanges have not received any guidance from regulators that would prevent Russian users from trading their currencies. Both the United States and the European Union have signaled that they will be looking into Russia’s use of digital currency to circumvent sanctions. Many exchanges, like Kraken, have published statements stating that they will follow government guidelines but will not restrict all Russian users arbitrarily.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.