Refusal to service sub-sanctioned Russian banks in the future may spread to all cryptocurrency exchanges, which is fraught with the emergence of “gray” exchange schemes and the growth of fraud. As a “countermeasure,” one of the experts interviewed by ForkLog suggested considering the possibility of blocking restrictive platforms in the Russian Federation.
Binance, Bybit and OKX trading platforms have recently removed Sberbank, Tinkoff and Alfa banks under US sanctions from their P2P platforms. Binance, in addition, also banned the Russians from exchange transactions with any fiat currencies, with the exception of the ruble.
According to Yulia Privalova, head of the FinTech & Crypto practice at the DRC law firm, this is due to the checks launched against the exchange by US regulators to help Russians bypass sanctions.
Privalova pointed out that despite the restrictions, merchants in the terms of the deal replace the names of the sanctioned banks with “yellow”, “green”, “Yellow Oleg” and others. Previously, alternative names were available directly in the payment method dropdown, but Binance later removed them.
The lawyer added that at the moment, Russian users can still use alternative cryptocurrency platforms. However, in the future, she did not rule out that a similar ban could apply to them.
“Of course, in the future there will be restrictions on Russian users for all exchanges, which will complicate the process of buying and selling cryptocurrencies, the use of decentralized platforms and access to more “gray” methods of withdrawing funds through third parties. This, in turn, may lead to a new wave of fraud and loss of funds by the population,” Privalova warned.
She recommended that users increase their financial literacy and keep funds in cold wallets rather than exchanges.
Indefibank CEO Sergey Mendeleev believes that the simultaneous disappearance of sanctioned banks from three exchanges is similar to the collusion of these specific companies:
“Why did this story happen only on these exchanges, while everything remains the same on Gate.io or Huobi?”
At the same time, the expert called the fiat restrictions of Binance for residents of the Russian Federation a more serious problem.
“If sanctions restrictions on certain banks create only minor difficulties (which the community immediately overcame by agreeing to conduct transactions on Sberbank through Russian Standard), then you will have to figure out how to deal with the first one, since this destroys a large number of ties, before only internationally, on which many made good money, ”Mendeleev explained.
In general, he believes that in this situation, “the market will decide” and Russian users will leave Binance “for more sane and loyal exchanges.”
The expert stressed that there were no prerequisites for the introduction of such strict restrictions.
“On the part of the leadership of the Russian Federation, it would be nice to see some kind of countermeasures, for example, blocking these resources or, even tougher, recognizing their activities on the territory of the Russian Federation as undesirable, with all the ensuing consequences. But I’m afraid that people who make such decisions are not even aware of the situation, unfortunately,” Mendeleev concluded.
The introduction of restrictions on Russians is associated with the obligation of crypto exchanges to comply with the laws of the countries where they are registered, including the sanctions policy, adds Andrey Tugarin, managing partner of GMT Legal.
According to him, cryptocurrency transactions are no longer a way to circumvent restrictions.
“Potential tightening of service may be in the event that the sanctions pressure increases. We see that crypto-operations do not save from sanctions, therefore, all the restrictions of the traditional world will be duplicated on the crypto-currency sphere, on exchanges and other VASP“, he said.
Recall that in early May, the media reported on the investigation of the US Department of Justice Department of Homeland Security in relation to the parent company, Binance Holdings Ltd. on the fact of possible non-compliance with sanctions against the Russian Federation.
In March, a lawsuit was filed against the exchange CFTC. It also claims that the exchange’s support team “teaches people how to get around sanctions.”
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