Crypto exchange Binance, which recently agreed to pay a massive $4.3 billion+ as part of an unprecedented settlement with US regulators, is now preparing to leave the Russian market. The company will also end support for Ruble-based transactions due to regulatory challenges.
Binance confirmed that it would be removing Ruble support and will also fully exit Russia as it focuses on ensuring compliance across the different jurisdictions in which it does business.
Binance, which is still the largest cryptocurrency exchange in terms of trading volume and scope of operations, has stated that it will no longer support trading pairs with the Ruble. As widely reported, this will become effective beginning on January 31, 2024.
This latest announcement is now a part of the crypto exchange’s exit plan from Russian markets, after the sale of its Russia-based unit to CommEX.
In 2023, Binance had also announced the sale of its Russian exchange to CommEX when the firm’s operations were scrutinized by the US Treasury’s Office of Foreign Asset Control (OFAC) for enabling (allegedly) transfers with sanctioned Russia-based organizations (after the unprovoked Russian invasion of Ukraine in early 2022).
Binance’s management has said that after the move to exit Russia with the sale to CommEx, Binance P2P will not provide support for any Russian Ruble trading pairs.
Notably, Binance has still been supporting trades made with RUB via its P2P platform. The firm says it will eventually stop supporting RUB transactions completely.
However, clients may now carry out Ruble-based transactions without paying fees via CommEX by using their existing Binance accounts/login credentials.
Prior to the mentioned deadline, Binance had permitted clients to withdraw Rubles through various fiat options and then convert them to cryptocurrencies or even trade them via Binance’s spot market.
In statements shared with CI, Mikkel Morch, Chairman of crypto investment fund ARK36, provided his perspective regarding the market effect of Binance’s declining dominance:
Morch stated:
“Binance’s waning dominance highlights the rising preference in the market for decentralised alternatives; their recent market-share slide comes as investors, wary of centralised exchange vulnerabilities, exposed by regulatory and legal issues, pivot towards decentralised finance (DeFi) and decentralised exchanges (DEX). These offer better control, privacy, and security and have already gained traction; they are likely to see further adoption and value, with market dynamics favoring user-centric financial solutions. DeFi and DEX will outpace their centralised counterparts, as users prioritise autonomy and transparency.”
Morch added:
“This shift will be a driving force in the ongoing bull run, but this evolving landscape also underscores a broader transformation in the crypto space, where decentralised ecosystems are becoming the bedrock of trust and innovation.”
Although decentralization and decentralized crypto platforms have matured considerably in the past 5 years, they are still quite problematic – especially for consumers who are not as technically-savvy. It is very hard to fully understand the complex nature of executing trades through so-called DeFi platforms because of their highly technical nature. Users may risk losing large amounts of funds, because they forget or misplaced their private keys, seed phrases, or were unable to follow instructions related to a technical upgrade.
There is a lot of work that needs to be done before centralized platforms are effectively replaced by their decentralized alternatives. Most of these so-called DeFi services are also not really decentralized because they are actually being controlled by a relatively small number of entities. In addition to not performing nearly at the level of centralized service providers, DeFi has been targeted by scammers, fraudulent schemes and a large number of bad actors – all without much consequence.
With Binance’s declining dominance, it is a lot more likely that more stable firms like Coinbase and Kraken will emerge as more significant contributors to the crypto space. Ensuring regulatory compliance is absolutely essential and the future of crypto / digital assets must be based on a sound, well-regulated business environment.