Good morning, and welcome to Protocol Fintech. This Wednesday: weaponizing wire transfers, Satish Kumbhani disappears, and Hillary weighs in on crypto.
Off the chain
Crypto has been dominating the headlines, and it’s understandable, given the novelty of the first crypto war. But it’s a little early to write off fiat currency, which is going to play a far more decisive role in this conflict. That’s why I asked Tomio to take a look into how the traditional money-transfer business was responding to sanctions and other disruptions. Read on for more.
— Owen Thomas (email | twitter)
Weaponizing the wires
There’s been a keen focus on the role of crypto in the war between Russia and Ukraine, both as a means of bypassing sanctions against Russia and potentially helping Ukraine. Lost in that discussion is how the conflict is affecting the far larger and, frankly, more important flows of fiat currency.
The West’s sanctions haven’t generally prohibited sending ordinary Russian citizens money, but sanctions don’t make it easy. The U.S. and other countries have imposed a variety of restrictions on Russia’s financial sector, and have said they will shut down SWIFT messaging for certain Russian banks. All of that complicates operating the financial machinery to execute a transfer.
Some companies are acting to shut down the movement of money to Russia. It’s just not always clear why.
- Money transfer companies Wise and Remitly have stopped money transfers into Russia. Zepz and TransferGo have also blocked their services in the country.
- Revolut still appears to support transfers in its app, as does PayPal’s Xoom. Revolut noted it was operating in compliance with the U.K.’s FCA and other jurisdictions, and would “take further action as necessary.”
- There are some other ways to send money, such as prepaid cards, which may still be viable, said Melody Brue, senior analyst at Moor Insights and Strategy. But the options are limited.
Some companies cited sanctions compliance. Personal ties and corporate obligations may also have influenced some companies’ responses.
- Visa and Mastercard said their networks are blocking Russian financial institutions as a result of sanctions.
- “With regard to Russia, as a result of and in compliance with the ongoing sanctions, we have suspended service to RUB,” a Wise spokesperson said.
- Wise grew up in Russia’s shadow. The company was founded by two Estonians, one of its oldest offices is in Cherkasy and many employees are from Ukraine.
- Revolut CEO Nik Storonsky is Russian, with a Ukrainian father. His co-founder, CTO Vlad …….