On August 27, Binance, the world’s largest cryptocurrency exchange, banned Russian clients from transactions with any currency other than the ruble through its own p2p platform, and disconnected users who were verified as citizens of other states from transactions with rubles. The platform was mainly used by expats to convert rubles into local currencies, pay for foreign online services, as well as arbitrage traders, writes RBC Crypto.
One of the possible reasons for this decision was publication publication of The Wall Street Journal on August 22 that by supporting transactions using cards of Russian banks, the exchange facilitates the withdrawal of Russian funds abroad and circumvention of sanctions. Citing sources, the authors of the article said that the US Department of Justice is investigating Binance in connection with a possible violation of US sanctions against Russia.
In March 2023, Binance, in accordance with the tenth package of EU sanctions, closed access for Russians to p2p transactions in US dollars and euros, however, this did not affect transactions in the currencies of other states, and participants in exchange transactions on the p2p platform continued to use bank cards from the sanctions list during exchange.
For several days, p2p platform administrators still used loopholes to preserve the ability to use cards of sub-sanctioned banks, for example, by renaming banks in the payment method selection menu. But in the next material On August 26, WSJ journalists openly wrote that they monitor the Russian-language chats of Binance users and referred to messages and screenshots containing any ways to circumvent the bans.
The next day after the release of the material, users began to report restrictions, and a day later in Binance confirmed their introduction through official Russian-language channels. Representatives of the exchange declined to comment.
“Between the hammer and the anvil”
The imposed restrictions are the result of repeated attacks on Binance by the US authorities, who accuse the exchange of helping to circumvent sanctions, says Fedor Ivanov, director of analytics at the Shard cryptocurrency asset security platform. In 2022, publications were repeatedly published about the relations of the exchange with Iran, now they are talking about Russia. The exchange removed sanctioned banks from its p2p platform and closed transactions with Russian users in any currency other than the ruble, in response to the publication of The Wall Street Journal, where it was unequivocally said about the legal risks that the company bears without restricting users from Russia.
All this is happening against the backdrop of lawsuits from US regulators, as well as pressure from Western partners of the exchange, which are gradually starting to refuse to cooperate with it. At the beginning of the summer, Binance had problems with banks that made payments in dollars and euros, cooperation with Visa and Mastercard ended, and the company began to rent licenses in Europe.
Binance was indeed followed by the OKX and Bybit exchanges. On the p2p platform, Russian banks Sberbank, Alfa and Tinkoff became unavailable for OKX when choosing payment methods, and Bybit does not conduct transactions using their cards, although the banks themselves are available in the list among payment methods.
It is logical that other exchanges that have a large share of Russian users and claim to work in the legal field do not want to receive similar accusations, which is why they followed Binance, explains crypto expert and author of the GFiS Channel telegram channel Taisiya Romanova. The reaction of Binance itself is also “quite understandable”: to take a number of measures to avoid further accusations.
A small proportion of operations on the p2p platform really fit these schemes, but the main activity on it was associated with arbitrage activities and the scrolling of so-called “bundles”, as well as relocators for the profitable conversion of rubles into the currencies of other states. For the withdrawal of large amounts abroad, Binance, in her opinion, was not the best channel, both because of the restrictions for Russian users, and because of the “not the most lenient” rules of the platform itself.
Consequences for users
Restrictions have existed since the beginning of March 2023, when the exchange banned Russians from working with dollars and euros. Therefore, conceptually, nothing new has happened, explains Nikita Zuborev, senior analyst at Bestchange.ru. The main flow of circumvention of sanctions was still limited by them back in the spring, other currencies were not used so often and were more likely to be needed by emigrants in some countries where it is difficult to convert rubles into local currency.
The exchange process will become more complicated, but will not stop completely, Zuborev is sure. Now users from Russia living abroad will either need to have two accounts (one registered outside of Russia, the other inside), or lengthen the exchange process by first buying stablecoins and exchanging them on other exchanges or in exchange offices for the desired fiat currency. Bypassing sanctions “as it existed and will continue to exist”, despite the new rules, the process itself will simply become less convenient than it was before the introduction of new restrictions, the analyst predicts.
The main solution for users is to switch to other exchanges that have not joined the sanctions, Tugarin said. “Today there are enough of them on the market. Perhaps it makes sense to pay attention to these exchanges from the point of view of investment attractiveness, since the number of their users will probably only grow due to the fact that they have not joined the sanctions, ”admits the lawyer.
The restrictions will actually affect the ability of Russian users to transfer money abroad and will not affect those who need the exchange to trade cryptocurrency with the input and output of rubles in Russia, Fedor Ivanov believes. As for Binance itself, the further steps of the platform, in his opinion, depend on the situation in the US. If pressure continues on it and it has to curtail business in the West, then restrictions on Russian users may be lifted. If the issues are resolved there, then, on the contrary, the exchange may completely leave the Russian market.
Source: Cryptocurrency
I am an experienced journalist and writer with a career in the news industry. My focus is on covering Top News stories for World Stock Market, where I provide comprehensive analysis and commentary on markets around the world. I have expertise in writing both long-form articles and shorter pieces that deliver timely, relevant updates to readers.
