By politicizing their products and pushing people worldwide toward Bitcoin, Visa and Mastercard are digging their graves. Following the cessation of operations for Russia-based users, cryptocurrency exchanges and financial services firms will likely no longer accept transactions completed with many major credit cards.
Following Russia’s military actions in Ukraine, Visa, Mastercard, and PayPal announced on Saturday that they would suspend Russia operations. According to reports, Apple Pay and Google Pay have restricted services for some Russians. However, users are unlikely to use the credit above cards for transactions on the payment apps. The decision by three major US credit card companies and others to cease operations in Russia appeared to be unrelated to efforts to comply with economic sanctions imposed on certain Russian banks and wealthy individuals. Coinbase announced on Sunday that it had blocked more than 25,000 wallet addresses “related to Russian individuals or entities we believe to be engaging in illicit activity” but had not publicly addressed the credit card ban at the time of publication.
Following the changes in the companies’ policies, ordinary Russians who use Visa or American Express credit cards abroad or within the country appear to be unable to use them for everyday transactions. Mastercard’s network will no more extend support cards issued by Russian banks, and those issued by other foreign banks will not work at Russian merchants or ATMs.
While the loss of Visa and Mastercard appears to be a significant blow to Russia and its citizens, reports indicate that the country may turn to Chinese payment systems such as UnionPay.
Regulators have not issued guidelines to cryptocurrency exchanges that prevent Russian users from trading their coins. Both the United States and the European Union have hinted that they will be looking into Russia’s use of digital currencies to avoid sanctions. Many exchange leaders, including Kraken, have issued statements stating they will follow government guidance but will not unilaterally block all Russian users.
All consumers who want to buy cryptocurrency through an exchange with a credit card issued in Russia by one of these companies will presumably be unable to do so soon. However, peer-to-peer transactions appear to be still possible. There were mixed reactions to the decision on social media, with many claiming that credit card companies could help Ukraine by hurting Russia economically, but at the expense of civilians who had no say in their country’s military actions.
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