Russia to begin ‘mass blocking’ of major crypto exchanges in summer, warns expert

Russia will block citizens from trading crypto on overseas exchanges as early as this summer, industry experts warn.

Roskomnadzor, the country’s internet and media censor, is poised to act, Nikita Zuborev, senior analyst at the Russian crypto exchange Bestchange, told Russia media outlet RBC.

“[The industry] expects Roskomnadzor may begin the mass blocking of the websites of crypto exchanges that are not registered in Russia as early as this summer,” Zuborev said.

The warning comes as the Kremlin and lawmakers attempt to police the nation’s crypto exchanges more strictly with new legislation during the State Duma’s forthcoming spring session. Policymakers say the new rules will outlaw transactions made on unregistered trading platforms.

A block on overseas crypto platforms would mark an escalation of the Kremlin’s censorship of foreign platforms. Roskomnadzor recently moved to block chat apps like Telegram and WhatsApp. It is also trying to restrict virtual private networks, which allow Russians to bypass blocks.

Earlier this month, the Ministry of Finance said the daily value of Russians’ crypto transactions had risen to $648 million. As crypto exchanges are still unregulated in Russia, all these trades take place either on unregistered domestic platforms or overseas exchanges, the ministry added.

Censor’s AI tools

Censors will likely follow the same technical playbook they’re using to block certain Russian-language YouTube services and “block-circumvention tools,” Zuborev said.

Roskomnadzor’s blocks will focus primarily on exchanges that have previously shown a willingness to comply with US, EU, and UK-led sanctions regimes, said Ignat Likhunov, founder of the legal firm Cartesius.

“It looks like the conditions for unfriendly foreign exchanges will worsen in Russia,” Likhunov said.

Russian citizens will be restricted from accessing many crypto trading platforms, the lawyer Dmitry Machikhin said, but blanket bans will be hard to enforce.

Machikhin noted that even after Binance’s official exit from Russia in 2023, at least a million Russians continue to trade on the platform.

Russia’s data protection laws could prove a stumbling block for overseas exchanges wanting to do business in Russia, the crypto market analyst Viktor Pershikov told the same media outlet.

These laws stipulate that firms that keep personal data on Russian citizens must do so on servers physically located in Russia.

As many larger international exchanges operate servers in Europe and the United States, Pershikov said, Roskomnadzor is likely to act sooner rather than later.

The forecasts come hot on the heels of reports Roskomnadzor will spend $29 million on AI and machine learning tools this year as part of its revamped web censorship drive.

Experts said these tools could disrupt Russian crypto traders’ ability to access overseas exchanges, mining pools, and data services.

Tim Alper is a News Correspondent at DL News. Got a tip? Email him at tdalper@dlnews.com.