Key Takeaways
- Russia is increasingly turning to crypto to avoid sanctions and macroeconomic woes.
- Crypto mining has been legalized in Russia, and cross-border crypto transaction trials are underway.
- Russia is reportedly developing its own stablecoin tied to the yuan and other BRICS member currencies.
In late 2023, Binance exited the Russian markets, leaving a huge crypto void in its wake. Now, almost one year after its official departure, how is the crypto scene doing in Russia?
Binance Exits Russia
The often-embattled cryptocurrency exchange Binance announced in September 2023 that it would cease operations in Russia.
Additionally, the firm stated it would sell its entire Russian business to the local exchange CommEX. The deal’s financial details were not disclosed, though interestingly, CommEX reportedly launched in September of that year.
Naturally, the world’s largest cryptocurrency exchange exiting such a massive market wasn’t exactly a decision Binance wanted to make.
However, Russia’s invasion of Ukraine has given rise to geopolitical and macroeconomic tensions. This also resulted in Russia banning citizens from trading non-ruble currencies.
This development came just months after the US Department of Justice (DOJ) began investigating whether Binance had violated US sanctions against Russia due to the invasion.
At the same time, Binance was already facing increasing scrutiny in several other major markets.
Russia Reacts
When Binance left, Russia lacked any sense of direction when it came to regulating cryptocurrencies.
However, despite this, the Kremlin reported a surprising uptick in Russian crypto transactions—a nearly threefold increase in 2023.
This surge in activity came just weeks after Binance began shuttering its operations in Russia, leaving many to wonder how the market was flourishing in its absence.
A closer examination revealed that local clients were flocking to alternative platforms, including peers like KuCoin, Bitget, and Bybit, which saw an increase in user activity.
Peer-to-peer (P2P) trading, on the other hand, declined substantially, suggesting that the Russian market was adapting to the new landscape.
The economic sanctions imposed in response to the war in Ukraine were undoubtedly taking a toll on Russian citizens’ finances, which may have driven them to seek alternative means of financial exchange.
Adding to the pressure, the United States imposed fresh sanctions on over a dozen fintech firms and individuals allegedly tied to CommEX, the exchange that had sought to fill the void left by Binance. The sanctions took their toll, and in March 2024, CommEX announced plans to wind down its operations.
Regardless, crypto activity in Russia was seemingly on the increase. It was only natural that the government decided to take some serious action and regulate crypto trading.
Laying the Groundwork
Now, a year without Binance, it appears Russia is slowly warming up to the crypto industry.
With a reported increase in crypto activity, partly driven by its need to find alternative payment methods to bypass sanctions, Russia’s government is working to establish regulatory frameworks for the sector.
Earlier this year, the Central Bank of Russia (RBC), five other major banks, and the financial monitoring service Rosinmoniroting (RFM) began the “Know Your Crypto Client” pilot program. The program aimed to control capital outflows and enforce compliance, granting Russian authorities crypto/fiat monitoring powers.
In August, Russian President Vladimir Putin legalized crypto mining in Russia. The rubber stamp triggered a massive surge in orders for crypto-mining hardware.
According to President Putin, the new law has put Russia on the map as a leading crypto mining hub thanks to its Siberian energy surplus.
In September, Reports emerged that Russia is set to begin testing cross-border transactions with crypto, an initiative reportedly approved by Putin. Additionally, it is also working on launching two new crypto exchanges to support foreign economic activities.
Eddie is a gaming and crypto writer at CCN. Covering the often weird and wonderful world of Web3 with an adoring, but skeptical eye.
Prior to CCN, Eddie has spent the past seven years working his way through the crypto, finance, and technology industry. He began with PR and journalism with Bitcoin PR Buzz and BitcoinNews.com, eventually working his way to become a copywriter with a dozen firms, including the likes of Polkadot before returning to journalism in 2023.
Having studied Radio production and journalism at University in the UK, Eddie spent a few years making podcasts and presenting on a local London radio station as he built up his writing chops.
A lifelong skateboarder, Eddie can often be found at the skatepark or touring the streets looking for something new to try. That, or kicking back playing JRPGs on his original PSP.
