On sanctions and the cryptocurrency market in Russia: restrictions and recommendations for users

Representatives of the Bitfly management company explained that the decision was made on a legislative basis. The creators of the service were guided by the regulation “On Combating Money Laundering and Countering Illegal Financial Transactions.” Restrictions on Russian and Belarusian miners were introduced to ensure the impossibility of circumventing the U.S. sanctions requirements.

As of March 9, 2022, it is known that Ethermine has not yet blocked clients from the Russian Federation. However, Russian users will soon be forced to switch to other mining pools for ETH mining. By the late evening of March 9, 2022, dozens of threads have already been opened on thematic forums to discuss the best platforms.

Other restrictions

Part of the cryptocurrency exchanges themselves impose sanctions against Russians. Here are a few restrictions:

• Disabling trading pairs with the ruble. For example, on February 26, 2022, the creator of the Kuna Exchange announced such a decision. The news was published in the official Telegram channel of the founder of the platform.
• Stopping the registration of new clients from the Russian Federation. On February 26, 2022, the crypto exchange CEX reported about the introduction of such a restriction. At the same time, already created accounts of Russians registered less than 120 days ago were blocked.
• Stopping ruble transactions. For example, from February 26, 2022, all CEX users cannot make deposits in RUB and withdraw funds, as well as take loans in this national currency.

Further development scenarios

As of March 10, 2022, the situation in the field of cryptocurrencies remains unstable. Almost every day new restrictions are undertaken against Russian users of digital assets. Some sanctions are imposed by exchanges on their own, while others are imposed at the request of various governments and foreign financial regulators.

Blocking of Russian cryptocurrency accounts

Coinbase platform CEO Brian Armstrong said on March 4 that he believes it is mandatory for all users to have easy access to virtual assets. The head of the cryptocurrency platform explained his opinion by the fall in ruble quotes on Forex and currency exchanges. Armstrong said that for customers from the Russian Federation digital assets are a “lifeline” that helps to keep savings.

However, the head of Coinbase reminded that the exchange operates under the jurisdiction of the United States. If the government of this country demands to block all crypto accounts of Russian users, the platform will have to comply. A similar situation is with many centralized exchanges that have official registration in different countries.

Massive demands from governments to block Russian digital accounts could trigger the collapse of the cryptocurrency market in the Russian Federation.

Easing restrictions

The heads of most digital exchanges promise to reconsider the imposed sanctions against crypto users from the Russian Federation when the conflict between Russia and Ukraine subsides. The situation on the market of virtual assets will most likely begin to stabilize after its end.

Recommendations

Due to the imposed sanctions, Russian users started to face problems in the cryptocurrency market and even lose funds invested in virtual coins and tokens. But there are 4 basic recommendations, if you follow them, you can be able to save your invested money:

• Withdraw investments from centralized exchanges. The best way to secure capital is to transfer cryptocurrency to another payment system or digital coin.
• Switching to decentralized exchanges (DEX). Such platforms are not subject to laws and government requirements. At the same time, there are usually no trading accounts as such on DEX, so there is actually nothing to block.
• Cryptocurrency conversion through exchanges and P2P services. Such platforms will allow owners of digital assets to quickly buy and sell digital assets for rubles, dollars or other currencies in the future.
• Application of non-custodial crypto wallets. On the servers of such storages there is no information about clients’ registration data and private keys from user addresses. Developers of such software simply can not block wallets even at the request of the government or regulator.

Conclusion

At the end of February 2022, Western countries began to impose tough economic sanctions against the Russian Federation. Their consequences affected the domestic cryptocurrency market. By March 9, 2022, users from the Russian Federation increasingly began to encounter problems when interacting with digital platforms.

Some Russian clients lost access to their savings on exchange accounts altogether. However, in most cases, this is due to the aggravation of harsh economic conditions by restrictions from the platforms themselves. To avoid losing your investments, you should follow 3 basic recommendations:

• Cashing out accounts.
• Switching to DEX.
• Operating non-custodial cryptocurrency software.