Binance Limits Russian Accounts after New Sanctions, Others Likely to Follow

Binance, the largest global cryptocurrency exchange by market cap, has announced its intentions to limit services for certain Russian citizens in a bid to abide by the EU’s fifth package of restrictive measures against Russia. The exchange had previously said it had no plans to ban all Russians from using its platform.

Binance Forced to Take U-Turn on Banning Russian Users

On Thursday, Binance announced it will deactivate the accounts of its major Russian clients in Russia, banning accounts that hold crypto worth over 10,000 euros ($10,900) from making new deposits or trading. These clients would be able to withdraw their funds, however. 

Russian accounts that hold crypto worth less than 10,000 euros and that have completed address checks would remain active, Binance added. Moreover, Russian residents who have crypto worth over 10,000 EUR with open Futures/Derivatives positions will be given 90 days to close out their positions. Binance said:

“While these measures are potentially restrictive to normal Russian citizens, Binance must continue to lead the industry in implementing these sanctions. We believe all other major exchanges must follow the same rules soon.”

The move comes in response to the EU’s recently announced package of sanctions that target crypto wallets, banks, currencies, and trusts. Announced on April 8, the package was meant to close loopholes that could allow Russians to move money abroad. “This will contribute to closing potential loopholes,” the EU’s executive European Commission said at the time. 

Prior to this, both Binance and Coinbase had announced that they had no plans to ban all Russian users. “We believe everyone deserves access to basic financial services unless the law says otherwise,” Coinbase CEO Brian Armstrong said in early March. Likewise, Binance had said it would not “unilaterally freeze millions of innocent users’ accounts.”

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Can Russia Use Crypto to Evade Sanctions?

Following Russia’s unjustifiable invasion of Ukraine, the US and its allies imposed severe sanctions that were intended to cut Russia off from the global economy. In the wake of that, skeptics and even some in Congress started speculating that Russia could use crypto to evade sanctions. 

In the US, Senator Elizabeth Warren and a number of her co-workers introduced legislation to block cryptocurrency companies from conducting business with sanctioned companies. The bill places unnecessary and burdensome restrictions on crypto, according to crypto experts who believe Russia won’t be able to use crypto to evade sanctions. 

For one, Binance’s CEO has argued that crypto is too small and too traceable to help Russia evade sanctions. In an interview with CNN, he said:

“On using cryptos to avoid sanctions, I think that is a mess. If you look at the data, nobody smart does that. Crypto is too traceable. The governments around the world are very good at tracing crypto transactions. So crypto is not good for that.” 

The US has also taken additional measures to ensure Moscow is not able to evade existing sanctions. Just yesterday, the Treasury announced that it would expand its wide raft of sanctions to include Russian crypto miner BitRiver. In a statement, the Treasury said:

“By operating vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetize its natural resources. Russia has a comparative advantage in crypto mining due to energy resources and a cold climate.”

Nevertheless, it remains to be seen whether other centralized crypto exchanges follow suit with Binance and restrict their services in Russia. However, it is worth noting that crypto transactions are decentralized, so no country can ban them — and users will always have the option to create a personal wallet and make peer-to-peer (P2P) transactions despite all limitations. 

Do you think other crypto exchanges will also restrict their services in Russia? What could that mean for the crypto industry in the country? Let us know in the comments below.