Russian Regulatory Debate Sees Binance Eyeing Market Entry

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In Brief
  • The regulatory debate on cryptocurrencies in Russia has triggered market entry interest from Binance, according to one executive.

  • With an annual volume of $5 billion in crypto transactions last year, according to the country’s central bank, Kostarev characterized Russia as strategically important for Binance.

  • At the insistence of the central bank, the finance ministry prepared a concept for regulating the industry, following a request for consensus from President Vladimir Putin

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The regulatory debate on cryptocurrencies in Russia has triggered market entry interest from Binance, according to one executive.

With the prospect of regulatory acceptance of cryptocurrencies in Russia, Binance Eastern European Director Gleb Kostarev believes the market is ripe for entry. “Our goal is to obtain a license and conduct legal business where the regulation allows,” Kostarev said

With an annual volume of $5 billion in crypto transactions last year, according to the country’s central bank, Kostarev characterized Russia as strategically important for Binance, adding that any progressive regulatory approach taken there could have significant influence in the region.

“In Ukraine, Kazakhstan and Uzbekistan they are more loyal to cryptocurrencies and are taking steps towards liberalization, rather than restriction,” he said. “But local regulators are taking these steps with an eye on Russia.”

Russian crypto debate

Cryptocurrencies have been a controversial subject in Russia for many years. While the government has warned of illicit uses for cryptocurrencies, it eventually gave them legal status in 2020, but banned their use as a means of payment.

Recently, the Russian Central Bank suggested banning the usage, trading and mining of cryptocurrencies over concerns of illicit funding and financial instability. However, other authorities, including representatives from the Ministry of Finance, believe regulation to be preferable to restrictions. “We need to give these technologies the opportunity to develop,” said

financial policy department director at the Ministry of Finance, Ivan Chebeskov.  

These conflicting approaches triggered President Vladimir Putin to request that the competing authorities “come to some kind of consensus,” at a recent government meeting. At the insistence of the central bank, the finance ministry prepared a concept for regulating the industry. Potential policies may include carrying out all crypto transactions through Russian banks, identifying crypto wallet holders, and classifying digital asset investors as either qualified or unqualified.

For his part, Kostarev took a conciliatory approach to the central bank’s more skeptical perspective in the debate. “For now, we consider this as an invitation to dialogue with the regulator,” he said.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.

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