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Ukraine's Deputy Prime Minister and Minister of Digital Transformation Mykhailo Fedorov has urged cryptocurrency exchanges to block the addresses of their Russian customers.

"It is crucial to freeze not only addresses associated with Russian and Belarusian politicians, but also those of ordinary users," Fedorov said in a tweet Sunday.

I ask all major cryptocurrency exchanges to block the addresses of Russian users.

It is crucial to freeze not only addresses associated with Russian and Belarusian politicians, but also those of ordinary users.

Ukraine has been bleeding and shedding tears since Russian leader Vladimir Putin launched a full-scale military strike against the Eastern European country. The international community has imposed a series of sanctions on Russia in response to this unwarranted attack.

For example, the assets of the Central Bank of Russia, as well as those of President Putin and Foreign Minister Sergey Lavrov, have been frozen. In addition, the United States, the United Kingdom and the European Union have removed Russia from the international financial intermediary SWIFT – a move that essentially prevents Russia from sending and receiving transactions to and from allies such as Belarus.

Still, there are concerns that the Russian government, as well as odious oligarchs, may turn to cryptocurrencies to circumvent the harsh sanctions imposed on the country following the invasion of Ukraine. Observers say cryptocurrencies could be used as a workaround for sanctions because they allow for borderless payments.

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As of now, no major cryptocurrency exchanges have chosen to freeze accounts belonging to Russian users. However, Ukraine based digital asset marketplace DMarket has "cut all ties with Russia and Belarus due to the invasion of Ukraine." As a result, DMarket will freeze all accounts of previously registered users and donate the proceeds to the war effort.

Meanwhile, the Ukrainian government is accepting cryptocurrency donations to fund its fight against Putin's forces. Zy Cryptocurrency estimates that Ukraine has received more than $30 million in various cryptocurrencies since the donation campaign was launched.

Bitcoin Struggles to Gain Momentum Amid Russia-Ukraine Hostilities

Bitcoin has been moving sideways in recent months, and the recent hostilities in Ukraine and Russia have only worsened its prospects.

Bitcoin plunged last week following Russia's invasion of Ukraine, causing the cryptocurrency market to go into freefall worth more than $200 billion, losing more than 11% in 24 hours. The market drop bodes ill for its safe-haven status as investors are selling their holdings due to the chaos caused by Russia's invasion of Ukraine.

The correction in the cryptocurrency market was reflected in the mainstream financial markets, with the U.S. S&P 500 and Nasdaq down more than 2% as geopolitics unfolded.

BTC is currently changing hands at $41,207. The global cryptocurrency market cap is about $1.8 trillion, down about 40% from the $3 trillion announced in November.

As peace talks between Ukraine and Russia begin in Belarus, it remains to be seen if BTC and the broader cryptocurrency market will move further higher.