- WalletConnect has halted its revoked access for users in Russia due to international sanctions, citing compliance with the U.S. Treasury’s OFAC sanctions as the reason
- OFAC initiated efforts to restrict cryptocurrency transactions involving Russian individuals in 2021, particularly following the country’s invasion of Ukraine
- The move sparked mixed responses from the crypto community, with some questioning adherence to government laws while others see the need to act within the law for sector growth.
Web3 startup WalletConnect has declared that it is ceasing operations for users in Russia, citing international sanctions as the reason for its actions. The company made the announcement in an X post yesterday where it noted that it had put the block in place on Monday, citing compliance with the U.S. Treasury’s Office of Foreign Assets Control (OFAC) as the rationale behind its actions. WalletConnect also noted that non-sanctioned regions were temporarily impacted by the block, but these issues have been resolved.
OFAC Sanctions Stil Having an Impact
OFAC began its effort to stifle cryptocurrency transactions involving Russian individuals in 2021, ramping up its crackdown following the country’s invasion of Ukraine in February 2022 by sanctioning specific Bitcoin and Ethereum addresses. These moves were part of a wider package of sanctions against Russian companies and nationals following the invasion.
In 2021, OFAC issued guidance implying its expectation that virtual currency operators should share the same responsibility as traditional financial institutions in preventing sanctions violations. This was reflected in its sanctioning of the mixing service Tornado Cash, which led to developers and the founder being arrested.
In the X post, WalletConnect announced that the block had been implemented on Monday, but that some non-sanctioned individuals had been temporarily affected:
Dear WalletConnect community,
In light of the latest legal and OFAC guidance, WalletConnect has restricted the availability of the WalletConnect Protocol in Russia. Certain regions of Ukraine were temporarily impacted; service has since resumed.
We sincerely apologize for any… pic.twitter.com/tg5FicCh4g
— WalletConnect (@WalletConnect) October 31, 2023
“Not Very DeFi”
The response from the community was not very positive, with many questioning why the protocol was adhering to government laws; one X user said that the action was “not very DeFi of you,” while another opined “So much for being decentralized.”
These responses show the disconnect in the crypto space, with many users of cryptocurrencies believing that projects should resist government enforcement actions. However, others believe that the only chance for growth within the sector is to act within the law and encourage more users.
