Can the Blockchain Really Bypass Government Policies?

One of the importance of the blockchain is Decentralization, but how do blockchain stakeholders boycott real-life politics in the actualization of their goals?

For instance, the United States’ sanction on countries like Iran is causing many US-based companies to re-evaluate their release of goods and services to the Iranian market. These companies are forced to weigh their options carefully before picking a side, and so far, the many occurrences in this field have been detrimental to the financial inclusion of Iran into the cryptocurrency space.

The four recent ones are

1. Gitcoin, a crypto crowdfunding platform, put paid to a rally to help Farsi-students learn Ethereum coding, fearing US sanctions.
2. BitGo, a crypto wallet startup getting penalized in 2020 for interacting with users in US-sanctioned countries. Actually, BitGo had a little fault in this issue, as the problem arose from its clients receiving payment from sanctioned countries. The Office of Foreign Assets Control (OFAC) explained that the US sanctions prohibit that.
3. Binance, a global crypto exchange, has also been known to deactivate accounts from the Middle East region; especially Iran and Cuba.
4. ConsenSys Academy, a blockchain startup focusing on Ethereum-centric knowledge, also came under the limelight in 2021 for banning about 50 Iranian students from its smart-contract learning platform. While it was against the company’s policy, they had to issue the exit claiming a review was done on their platform and individuals who are located in countries prohibited by the US law were removed.

Following ConsenSys ban of Iranian students, GItcoin remained more or less one of the only hopes for Iranians to get into the crypto space with a certificate, and when the campaign started to help Farsi-speaking students in March, it seemed like a dream come true.

On Gitcoin, the news came as a shock to all when its COO announced in December that it was marking all donations as inactive. The fundraiser was shifted to a European platform which is based in Barcelona, Spain. Giveth, the new platform for the fundraiser event has seen donations of up to $8,000 for volunteers that have roots in Iran.

Despite this, everyone still seems shocked that real-life politics still has a say in matters of decentralization and borderless policies. One of the shocked individuals was Sahar Rahbari, a course creator for Farsi-speaking people. In an interview with Coindesk, he expressed his displeasure at the policy and lamented why Iranians are always at the receiving end.

Another course contributor, this time from ConsenSys, explained that though the US companies’ fear is unwarranted, it is understandable. The rules concerning foreign sanctions remain unclear, and to avoid legal troubles, many US companies are outrightly keeping Persians as far away as possible.

While it would have been better to have more explicit details of how Gitcoin got to know about the grant and its probable breach of US laws, all we have been able to gather from the US quarters is that this is not in any way a discriminatory effort, as the representative spoken to explained that there are other Farsi-speaking communities on Gitcoin’s program, and none other have been flagged down.

The process of the Gitcoin grant is simple. Any grant called is first raised by its community into a specified Ethereum wallet with all transactions recorded on the Eth block explorer. The Gitcoin algorithm matches every Ethereum spent with the DAI stablecoin

The grant proposal for the Farsi-speaking people became inactive less than 12 hours after it was first drafted due to some suspicion from the Gitcoin team that the grant might have trespassed US laws.  As a precautionary measure, the difficult decision had to be taken.

When asked about this report, the Gitcoin team explained that they received a call on December 7th about a new grant listed on their platform. The journalist, who called, preferring to remain anonymous, explained the US sanctions to Iran to the team and told them they might have just crossed a red line.

Because the terms of the sanctions were not clearly stated, the team was put in limbo. After contacting legal counsel, the team unanimously chose to shut down the campaign before it disrupts the entire network.

The Gitcoin team emphasized the need to make the funding process more decentralized and assured everyone they would make that happen, but pending the time that materializes, they have to err on the side of caution and follow US laws since they are a US-based company.

A previous occurrence

While many might want to berate Gitcoin for their choice, it is better to zoom out and look at the whole picture. Several months ago, the United States government jailed a citizen because he went to give a speech about blockchain technology and Web 3.0 in North Korea.

The man, Ethereum developer Virgil Griffith is the recipient of one of the scariest crime cases in the blockchain era.

His case shook the Ethereum community as no one expected the US government to be that strict. Even people that travelled with him without giving any speech now fear for their lives and safety. Gitcoin’s co-founder cited this case and asked everyone involved in Web 3.0 to move carefully, and lose some battles in order to win the war. According to him, it would not be really responsible to put their donors under the risk of OFAC.

While this news does not come good for the cryptocurrency market, the market is still optimistic about ETH2’s merger with the Ethereum mainnet. Stakers can earn passively through https://redot.com/eth2/