Feb 25, 2022 - Economy & Business

Russia's Ukraine invasion and the fintech industry

Ukraine flag and tech image
Illustration: Brendan Lynch/Axios

Russia's invasion of Ukraine and the geopolitical shockwaves it's creating is hitting nearly all corners of the global economy, including the nascent but fast-growing field of fintech.

  • "As almost all tech companies have some exposure to Ukraine / Russia…. every CEO is now a 'war-time' CEO," tweeted venture capitalist and fintech investor, Saar Gur.

It's a topic close to the hearts of many executives and developers in the crypto and fintech ecosystem:

  • Russian-Canadian Ethereum founder Vitalik Buterin called the invasion a "crime."
  • Solana Labs' Ukrainian-born founder, Antoly Yakovenko, tweeted that "Putin propelled us back to the 19th" century.

It's also thrown fintechs involved in money transfers into the heart of the geopolitical crisis.

  • Wise (LON: WISE) capped money transfers to Russia and Ukraine to about $224, citing recent developments making it "more difficult to operate our service." A spokesperson in an email wrote, "We are monitoring the situation closely and will comply with all sanctions."
  • Brex confirmed it stopped cash and card transactions to or from Ukraine to comply with a U.S. executive order, but said it was working on a solution to lessen the impact on customers in the area.
  • Revolut, which has offices in Ukraine, says it offered relocation support to Ukraine employees last week.
  • A Lithuanian startup, Paysera, said it would no longer process transactions in the Russian Ruble and would also close accounts belonging to Russian clients.
  • "Paysera stands in solidarity with Ukraine!" the company tweeted out on Thursday.

One thing is clear: Moving money in and out of Ukraine and Russia has been made more difficult, in part due to new sanctions imposed on major Russian financial institutions and oligarchs. But it's not impossible, thanks in part to fintech developments and cryptocurrencies.

  • Yes, centralized and highly regulated crypto companies will likely comply with sanctions. But how do you police more decentralized players? Some believe Russia's wealthiest could use crypto channels to blunt the impact of sanctions.
  • Iran, which has also been contending with sanctions, has used bitcoin to mitigate their impact, with 4.5% of mining originating from the country as of May, per blockchain analytics firm Elliptic.

The uncomfortable reality: Russia has been dealing with sanctions for many years, with its own set of banks and fintechs.

  • And how the world's second-largest economy, China, ultimately responds to the crisis may aggressively blunt the impact of Western restrictions.
  • Russia's largest bank, Sberbank, recently launched mobile money transfers to China's Alipay.
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