Several major Bitcoin exchanges have expressed willingness to open branches in Russia

Several major Bitcoin exchanges have expressed willingness to open branches in Russia, as outlined by the government in the roadmap to the end of 2022. ForkLog reported this, citing representatives of the trading platforms polled.

The requirements set out in the document envisage foreign cryptocurrency companies establishing a foothold in Russia, with the obligation to report to Rosfinmonitoring information on transactions with digital currencies for anti-money-laundering purposes. The roadmap also contemplates applying the law “On the Activities of Foreign Persons in the Information and Telecommunication Network Internet on the Territory of the Russian Federation” to crypto platforms.

The Binance CIS head, Olga Goncharova, told ForkLog that the company is prepared to open a branch, a representative office, or a separate legal entity in Russia, with registration of the office on Roskomnadzor’s website, “if this would promote user convenience and the safety of operations”.

The representatives of Huobi stressed that they would consider all options to continue operating in Russia. They supported the development and implementation of constructive rules that will “contribute to increasing trust” in digital assets and exchanges among retail and institutional investors.

The AAX platform does not plan to open an office in Russia in the near term, but could “start work in this direction” if new norms are approved. Anton Gulin, the platform’s regional director for Russia, told ForkLog that some government directives appear excessive and unfeasible under current conditions.

Among them is the possibility of withdrawing exchange funds only to wallets known to the regulator and registered in the state database. For this, the trading platform would not only need to identify the user and verify their data against the database, but also restrict transactions between the client’s wallet and their account on the exchange.

“The meaning of this requirement is not entirely clear. The vast majority of exchanges have systems that check all incoming and outgoing transactions. It would be more sensible not to embroil in the fight against ‘dirty’ transactions additional databases, but to introduce a single format of regulator interaction with exchanges and KYT providers,” Gulin explained.

In his view, under the current interpretation, the requirement to identify users will not curb illicit crypto flows, but will only complicate the process for the ordinary law-abiding trader. The regulator thereby shifts the emphasis from checking the “quality” of the cryptocurrencies that users trade, including outside exchanges.

“I see no obstacles to implementing requirements aimed at improving the quality of service for Russian citizens by foreign companies. The closer the regulator’s requirements are to the market, the higher the likelihood of their execution and effective operation in practice,” added Anton Gulin.

Representatives of Coinbase told ForkLog that they had nothing to say on the matter.

The Russian segment of the cryptocurrency market is critically important for major exchanges, says GMT Legal managing partner Andrei Tugarin. Therefore, platforms keen on Russian users will likely agree to comply with regulators’ requirements, as they are fairly standard and align with the FATF recommendations.

“A potential brake could be the absence of transparent requirements for Russian compliance. However today Russian laws are undergoing modification, with working groups in the government. All of this is aimed, among other things, at creating sufficient conditions under which large-scale crypto business can operate in Russia,” says Tugarin.

From a legal standpoint, restricting registration of Russian users on foreign exchanges is quite feasible. To do this, it would be enough to ban cryptocurrency turnover in the country outright. In that case a Russian user would be risky for exchanges and passing KYC for Russian citizens would become more difficult.

“Technically such restrictions can be circumvented, but at the verification stage an exchange could refuse registration to a user with a Russian passport if there are legitimate legal grounds,” explained a lawyer.

Moreover, as he notes, China’s example shows that the market can adapt to any bans — Chinese users remain clients of various crypto exchanges.

ForkLog also sent inquiries to the exchanges Bittrex, Bitstamp, Bitfinex, Gate.io, Kraken, OKX, Poloniex, KuCoin and CEX.IO, but did not receive prompt responses.

Last week in Russia, the roadmap to the end of 2022 was approved, providing for mandatory registration of crypto platforms in the country, as well as liability for illegal turnover of digital assets and failure to declare information about transactions with them.

Earlier in ForkLog, Exante analyst Vladimir Ananyev said that Binance is most ready to open a representative office in Russia among other platforms.

In turn, the exchange’s representatives then stressed that the main condition for issuing licenses and creating the registry would be the emergence of transparent and clear market rules.

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