Binance has announced it will be exiting its Russia business by selling it to crypto exchange CommEX, which launched just a day before the announcement.
The exit from the country may represent an attempt to get mainstream approval from the US Securities and Exchange Commission (SEC) following years of scrutiny, amid continued attempts to get a spot-based Bitcoin ETF approved by the regulatory body.
Noah Perlman, Binance’s chief compliance officer, said in a statement that the company has recognised “operating in Russia is not compatible with Binance’s compliance strategy”.
The world’s largest crypto exchange said there would be an orderly process for the migration of all of its existing Russian users, adding that all of users’ assets were safe.
“To ensure a smooth process for existing Russian users, the off-boarding process will take up to one year,” the statement read.
CommEX is a centralised cryptocurrency exchange backed by crypto venture capitalists, its website reads.
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Several western companies, including McDonald’s and Shell, have announced they will be selling their Russian assets to local managers in order to comply with new sanctions over Russia’s invasion of the Ukraine.
The news comes as the world’s largest crypto exchange continues to be investigated by the US Justice Department. Investigators are determining whether the exchange was used by Russians to dodge sanctions and move money secretly.
The exchange is also being investigated for potential money laundering and tax evasion, with an order to halt all operations in the UK.
Binance has been under intense scrutiny from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission over the past year. Both regulatory bodies have filed multiple lawsuits against the exchange and its founder Changpeng Zhao.
Binance has been controversial in its dismissive approach to regulation and tug-of-war with regulatory bodies. The exchange was banned in the US in 2019 for failing to comply with US federal laws, before returning quickly with a seperate law-compliant platform named Binance.US.
Binance’s exit from Russia also comes as the crypto exchange and many others in the industry attempt to get a spot-based bitcoin ETF approved by the SEC. All aplications have been rejected to date.
ETFs are investment funds traded on stock exchanges and often track an index, sector, or commodity.
They trade on regulated exchanges, unlike the underlying cryptocurrency, which trades on unregulated markets.
Nicklas Nilsson, consultant at research company GlobalData, described the structural impacts of an ETF as simplifying “the bitcoin investment experience for the mainstream investor,” in a recent webinar hosted by the firm.
“The approval of the ETF, is also effectival the approval of the underlying exchanges, which means more institutions can trade those exchanges, which means you get more traction and more interest,” Nilsson explained.
GlobalData estimates global cryptocurrency revenues will total $1.1trn by 2030, accelerated by concerns surrounding regulation and security being addressed.