Even though many famous exchanges have stopped doing business in Russia, many platforms are still serving the region as usual.
Even though the conflict between Ukraine and Russia has been going on for nine months, sanctions against Russia have continued to grow quickly. This time, lawmakers in the European Union said that they are going to make it illegal for Russians and EU citizens to send or receive crypto payments across borders.
As an example, the EU has now banned all “crypto-asset wallets, accounts, or custody services, no matter how much is in the wallet.” This is in response to Russia’s ongoing annexation of Ukrainian land, its repeated mobilization of troops inside the country, and its threats to use nuclear weapons.
It’s important to remember that sanctions in the past limited cryptocurrency payments from Russian wallets to EU wallets to about $9,700, or 10,000 euros. The goal of the new ban is to take away the Kremlin’s military power and cut back on important parts of its industrial complex.
All sides are coming after Russians who use crypto
Because of the EU’s sanctions, many popular cryptocurrency exchanges in the area, like LocalBitcoins, Crypto.com, and Blockchain.com, sent emails to their clients telling them to withdraw their funds as soon as possible because they would no longer be able to use their services.
As of September 2022, 8% of all cryptocurrency trades in Russia went through LocalBitcoins, making Russia the exchange’s biggest customer base by far. Before the ban, Russian consumers were also responsible for just under 20% of all the BTC that was traded on the exchange.
Binance, which is one of the biggest cryptocurrency exchanges in the world, is also working on putting the new rules into place. But a company representative told Cointelegraph that these changes might not go into effect for a while because there is no set date. In the same way, Bitfinex, an exchange that used to speak out against the growing number of sanctions against Russian nationals, recently changed its tune and said that it might have to change its policies if “directed to do so by the regulatory authorities” that control it.
Overall, earlier this month, Dapper Labs, a well-known blockchain developer, stopped Russian people from using its many digital asset services. Because of this, people on that side of the world will no longer be allowed to use the firms’ famous marketplace for nonfungible tokens (NFTs) and other crypto products.
Effect of the ban
Ajay Dhingra, who is in charge of research and analytics at the Unizen cryptocurrency exchange, to get a better idea of what was going on. Taking a more global view of the issue, he pointed out that one of the main ways digital assets can be used is to help people in a country at war protect their savings. He also said:
“The ban will bring pain to Russian retail and some financial institutions. Given the fact that BTC experienced sharp appreciation in price when the war broke out, European Authorities took note of this loophole in their strategy to curtail and suffocate Russia.”
In a similar way, Przemysaw Kral, CEO of Zonda, one of Eastern Europe’s largest exchanges by volume, told Cointelegraph that the sanctions, along with the EU’s yet-to-be-finalized Markets in Crypto-Assets regulation, which will be enforced by the EU’s Financial Action Task Force, could change the crypto landscape in the region for the foreseeable future. He added:
“As the situation escalates, irrespective of their personal views on crypto regulation, the decision by exchanges to comply with the new EU sanctions is a moral and ethical responsibility that all companies should carefully consider.”
What happens to the pairs of rubles that these exchanges are holding?
In the past, regulators have been tough on exchanges that let people from blacklisted countries trade on their platforms. This raises the question of what exchanges with a lot of rubles trading pairs will do with all of these assets. Dhingra said:
“This time, they will be cautious, given the brevity of the situation. The exchanges are now left with no option but to realize major losses on their balance sheets. However, the ban will bring decentralized finance back into the spotlight, as it provides a censorship-resistant and easily accessible infrastructure for people living in a geopolitical turmoil.”
Kral said that it’s not evident yet whether exchanges will have to return funds to Russian customers, block access to them, or freeze their accounts until sanctions are lifted. At last, he said that Zonda had closed all Russian accounts during the first round of sanctions in May, giving all ruble-paired assets back to their rightful owners.
In spite of the ban, many exchanges are still running
As we’ve already said, Binance is still thinking about limiting its services for Russian users, but for now, it’s business as usual. In the same way, the U.S.-based exchange Kraken hasn’t imposed any rules on its Russian clients, and there’s no sign of whether or not it will voluntarily adopt EU rules.
Antigua and Barbuda-based FTX is another famous exchange that hasn’t banned anything yet. This is also true for the popular Russian cryptocurrency platform Garantex, which still offers traders in the region a wide range of advanced services like futures and derivatives.
Other popular platforms in the area are Huobi Global, OKX, Kucoin, and Mexc Globa, all of which are based in Seychelles. In fact, Bybit, which is based in Singapore, told a crypto outlet that it will stick to its values of freedom, transparency, and decentralization and not put any sanctions on Russian clients, many of whom may or may not agree with the war or the way their leaders are acting.
Finally, it’s important to know that the cryptocurrency exchange Exmo, which is based in the United Kingdom and is very common in Eastern Europe, sold its Russian business to a local vendor earlier this year. Through its Exmo.me domain name, the platform is still working in Russia, Belarus, and Kazakhstan, which are all close by.
So, as the war between Ukraine and Russia goes on, it will be interesting to see how crypto companies in the area adapt to new and changing geopolitical realities.
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