I arrived in Tbilisi, Georgia, near Russia’s southern border in late February—just days after Russian forces invaded Ukraine. I was reporting on crypto and blockchain from St. Petersburg, but after the war started, it became impossible to live there.
During my first week in the city, I searched for ways to set up an apartment for rent and a basic bank account.
XX February, Tbilisi
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I walked into a major branch of Bank of Georgia, the second largest private bank in the country, next to Liberty Square in the city center. The bank was only open for an hour, but it was already full of people waiting to meet a banker.
As I entered, a clearly frazzled teller at a help desk asked me bluntly, “Russian?” I said no but I wanted to open a bank account. He handed me an application form, a piece of receipt with a number on it, and told me to wait for my turn.
While I waited, filling out the bank application, I noticed that no one holding a red passport – that is, a Russian passport – had been given applications. I saw Russian customers approach the bank’s windows. Each was essentially handed a long list of documents required to open a standard bank account with a debit card. The list included a copy of six months’ worth of transaction records, translations of the passport and a works contract.
I started to worry, because as far as I found out from my research, there was no need for it before. As I approached the window, the banker reached for a copy of the list of required documents—until I showed my US passport. Within half an hour, my application was processed, and the banker asked me to wait the next day to collect my card.
your papers, please
Money issues are further complicating the lives of Russians and Belarusians who have come to Georgia to escape harsh action at home. Telegram channels dedicated to Russians relocated abroad are full of questions about how and when people were able to transfer their money.
Russians in Georgia have little means to access their savings in Russian banks, other than restrictions from major banks, payment firms and card issuers such as MasterCard and Visa, and strong capital controls at home.
They face further difficulties at Georgian banks, where the once relatively lax requirements for opening a bank account have been replaced by intensive Know Your Customer procedures for optimistic customers.
Reports surfaced on social media of some banks requiring Russian and Belarusian applicants to give affidavits that Russia is an aggressor in an illegal war on Ukraine, recognizing Abkhazia and South Ossetia as parts of Georgia, and propaganda. vows to oppose.
Given recent laws regarding “anti-Russian propaganda” and the dissemination of misinformation about “special operations” in Ukraine, signing such a statement may be an offense if the signer returned home to Russia.
crypto without questions
Some Russian friends who know I work in crypto media asked me if there was a way to use crypto to access their funds.
Buying crypto is still largely unregulated in Russia, with smaller exchanges only requiring very basic KYC procedures, if they require them at all. And since any transactions via bank cards still take place in Russian territory, residents don’t need to worry about restrictions on credit card companies when buying crypto on a local exchange.
These smaller exchanges were quick to catch up to the surge in demand, and many were selling major coins such as bitcoin and popular dollar-based stablecoins such as Tether at premium prices, some well above their adjusted value in the dollar.
But smaller, less popular coins like Litecoin were still relatively reasonably priced in the past. two weeks after the start of the war. A friend transferred most of his savings to Litecoin through a Russian online exchange. Once his phone-based wallet pinged him with a notification that he had received his LTC, he went straight to one of the many physical crypto exchanges in Tbilisi to sell his coins for dollars.
I, myself, ventured into one such exchange to sell some ether for cash. On its website, the firm maintains its non-political status and compliance with Georgian law. I’m not really sure what I expected to see when I arrived, but what I found was a humble affair.
The small room of a crowded office building in the center of town contained two desks and a few chairs for customers to rest while the blocks were confirmed. Neon Bitcoin, Litecoin and Tether signs were flashing in a single window. Small Georgian and Ukrainian flags were stuffed into the potted plants.
As I arrived, a small group of Russian-speaking customers were thanking the two employees who were sitting at their desks. The staff asked how they could help me, and I said I wanted to sell some crypto.
which type? Ether. how much? Approx $2,500 value.
They gave me an address, and I sent crypto. After the transaction was confirmed, a cash counting machine spied out the exact amount in US dollars, which the staff carefully recounted at the desk in front of me. The whole process took about 10 minutes.
I was not once asked about my nationality, ID or occupation in Tbilisi.
Dollar in hand, I made small talk with the staff. The exchange’s operator, who prefers to remain anonymous, said that most of their clients in recent weeks were Russian or Belarusian and that the flow of clients was more or less nonstop.
It was one of several physical crypto exchanges in the Georgia capital that maintain laissez-faire laws on cryptocurrency. It has no licensing scheme for crypto trading, and crypto traders do not have to pay taxes on income or profits. The sale of crypto and hashing power abroad and domestically is also exempt from the country’s value-added tax.
no russian
For a capital of just over 1 million residents, it has been difficult to absorb the thousands of new arrivals from Ukraine, Belarus and especially Russia, both physically and politically.
And while many cryptocurrency-focused businesses in the city follow a live-and-let-live approach to their customers, many other businesses and services are outright discriminatory.
Take an example: Most of the city’s residential rental properties were razed in until the start of the conflict and the weeks after it. Now, in exactly one monthAs for the war, there is little to choose from for the hordes of Russians who are still to come.
Supply issues aside, Russians also face discrimination from landlords. When contacting real estate agents in the city, my first question always popped up as an American, “Are you Russian?” — This will be followed by something like, “We need to see your passport before proceeding.” Several real estate agents I spoke to said that landlords have a “no Russian” policy.
At a local cafe, I overheard a desperate Russian man talking on his phone to someone I thought was a real estate agent. He jotted down a list of necessities—such as the number of bedrooms, the price range, the need for a stove and washing machine—that he is desperate to find:
“My wife and I are renting a room in the city center right now, and she’s hysterical. There’s nowhere to cook, no washing machine to clean our clothes,” she says. Wants to go back. I say, ‘What do you mean go back? We can’t go back, not for anything. Were here…'”
While I cannot accept this kind of outright discrimination, I can understand how it happened.
In 2008, Russia supported separatists in the Georgian separate regions of Abkhazia and Tsakhinvali, now known as South Ossetia. The subsequent war in August 2008 lasted 12 days and left many areas bombed and wounded. Years later, the conflict has given Georgians a strong sense of solidarity with Ukraine and bitter resentment toward Russia.
a tool, not a solution
Almost all of the Russians I’ve met in Tbilisi use crypto to transfer at least some part of their savings. And while it initially sounds like a success story – it’s time for crypto to shine as the decentralized future allows people to control their savings – I think it’s important to zoom out.
Cryptocurrencies, like any other technology, are only as good or useful as the people and human institutions that surround and implement them. While many liberal-minded crypto-maximalists will undoubtedly admire the technology and its apolitical design amid this Russia-Georgian context, the only thing that allows it to succeed is the number of transactions connecting traditional financial systems to blockchains. There are people and businesses at both ends. -based, decentralized ones.
If the Russian government requires exchanges to implement a more robust KYC protocol – as they do with bank accounts and forex transactions – citizens cannot buy crypto, or they will be severely limited in how much they can afford. You can buy and save later.
If the Georgian government were to require exchanges to follow the same robust, nearly impossible KYC measures that private banks are currently implementing, to pay rent, buy food and organize transportation for Russian expatriates Selling your crypto will be incredibly difficult.
If exchange operators allow their political stances to determine their clients, the crypto-owning public could further limit their options to buy, sell and withdraw assets.
Crypto, like most other new technology, is praised as apolitical or neutral upon its creation, becoming political in the hands of those who use and regulate it.
Aaron Wood Editor at Cointelegraph with a background in energy and economics. He oversees applications of blockchain in building smarter, more equitable energy access globally.
The opinions expressed are those of the author alone and do not necessarily reflect the views of Cointelegraph or its affiliates. This article is for general information purposes only and should not be construed as legal or investment advice.