Binance has been working on expanding its services outside the West. In February, it made massive progress with an inroad into Russia.
Russia is still working to build a robust regulatory landscape, and Binance hopes to position itself to help.
Entering Into the Lions' Den
In mid-February, Binance announced it had joined the Association of Banks of Russia. Founded in 1990, the association includes over 300 financial institutions, covering about 90 percent of the country's economic and banking landscape. The exchange plans to launch a dedicated expert center for digital financial assets.
Binance's entry into the Association of Banks of Russia is in line with its spearheading of the digital financial expert center. The center's mission is to offer professional reviews to aid the circulation of digital assets in Russia and provide expert data on the topic. The expert center will also report on the international aspect of cryptocurrency handling.
Olga Goncharova, the head of Binance's government relations in Russia and the Commonwealth of Independent States (CIS), will head the expert center. Goncharova joined Binance in January as part of the exchange's mission to push compliance efforts in Russia and the CIS. She has an impressive track record, working as a department director at the Bank of Russia before joining the exchange.
Speaking on Goncharova, Georgy Luntovsky - the President of the Association of Banks - noted she will head the monitoring of cryptocurrencies and their circulation in Russia. Gleb Kostarev, the director of Binance Eastern Europe, expressed confidence in the company lending its industry expertise to Russia.
Providing Some Clarity
Binance's entry into the Russian space is an interesting one. So far, the government has failed to provide a consolidated regulatory draft, though many believed regulations would improve by now.
On February 18, Russia's Ministry of Finance began public consultations on crypto transactions and issuance rules. It was a welcome development, but much less than Russia's crypt space expected. The government announced it would draft a bill containing the central bank and finance ministry's consolidated position on digital asset regulation. Right now, estimates suggest it would take no less than another month for the draft legislation to appear.
To Ban or Not To Ban?
The consultation was yet another twist in Russia's continued dance with crypto. In January, the Central Bank of Russia issued a report detailing its position on digital assets. Using different anti-crypto arguments, the bank called for a sweeping domestic ban on traditional financial infrastructure to facilitate crypto activities.
It's worth noting that the bank didn't plan to outlaw the individual possession of crypto - or even the use of crypto exchanges and other platforms. Instead, the ban was directed at prominent players - big banks, institutional investors, etc.
With the crypto industry reeling, the Russian government approved the "Framework for regulating the mechanisms of digital currencies circulation" - a document generated by its Finance Ministry. The Finance Ministry proposed a regulatory regime that would essentially class cryptocurrencies as regular currencies.
Specifically, the document begins by dispelling any notion of a blanket ban. The Finance Ministry explained that a ban wouldn't be practical or feasible in a country with over 12 million crypto wallets holding over $26 billion in assets.
"A total lack of regulation, as well as a ban, would lead to the growth of a dark economy, fraud, and the overall destabilization of the sector. [...] Proposed legislative changes are aimed at creating a legal market for cryptocurrencies with circulation rules in place and the range of participants defined, along with the requirements that they are subject to."
The Finance Ministry also implied that the government's approval had settled any central bank concerns. The Ministry announced that a consolidated bill covering the views of both agencies would appear on February 18.
Still, the central bank wasn't satisfied. The Governor of the Central Bank of Russia, Elvira Nabiullina, doubled down on their opposition to any form of crypto legalization. Her statement came in mid-February when she announced the central bank's progress with a digital Ruble.
With the central bank still opposed to crypto, it became evident that a consolidated framework won't happen anytime soon. It is hoped that Biancne's entry into the industry will offer some clarity to help develop a proper consolidated framework.