Updated U.S. Sanctions Prompts WalletConnect To Block Russian Users

WalletConnect, a popular open-source bridge facilitating connections between web3 dApps and cryptocurrency wallets, has blocked Russian users from accessing its service.

WalletConnect announced the news via tweet on Oct. 31, stating the move was in response to updated sanctions guidance from the Office of Foreign Assets Control (OFAC).

"We have restricted the availability of WalletConnect in Russia according to the latest legal and OFAC guidance," said WalletConnect CEO, Pedro Gomes. “We will continue to follow guidelines and keep our community updated on any further changes.”

WalletConnect added that certain regions in Ukraine were temporarily impacted by the roll-out of the restrictions on Oct. 30, but services have since been restored. “No other countries were blocked,” Gomes added.

The U.S Treasury Department shocked the world last August when it sanctioned the Ethereum-based cryptocurrency mixing protocol, Tornado Cash, by adding the protocol and any affiliated Ethereum wallets to its Specially Designated Nationals (SDN) list.

The news marked the first time that OFAC designated computer code as an SDN, making it illegal for any U.S. residents to use the protocol. U.S.-based web3 development teams responded by blocking the sanctioned addresses from accessing their front-end interfaces to avoid facing legal repercussions.

While the designation sought to stop North Korean state-backed hackers from laundering stolen proceeds, many ordinary web3 users relied on Tornado Cash to bolster their privacy when transacting on-chain. Some industry stakeholders also feared the move could set a dangerous precedent of sanctioning decentralized protocols when used by nefarious actors.

OFAC later created a process allowing applications to request permission to move money out of the protocol.