After Binance, Unexpected Crypto Boom in Russia

The Russians, champions of dedollarization, have not hesitated to explore digital avenues to bypass the economic sanctions imposed by the West. Facing increasing isolation, digital assets have become a lifeline for many of them. The rise of cryptocurrencies offers a viable alternative to keep their economy afloat. Thus, the recent exit of Binance from the Russian market has caused quite a storm.

Binance backs out, Russia reinvents itself in crypto

The abrupt withdrawal of Binance from the Russian market a few months ago triggered a veritable rush for digital gold. Distraught, users had to urgently find new refuges for their precious assets. The Bank of Russia, in its latest report, provides a fascinating account of this forced migration.

The decentralized crypto exchange (DEX) Binance, once omnipotent, sees its share of web traffic melt away like snow in the sun, dropping from 47% to a mere 16% in the span of a quarter. But far from discouraging crypto enthusiasts, this withdrawal has invigorated the sector.

Indeed, crypto exchanges have never been more successful. Traffic on exchanges, peer-to-peer platforms, and other over-the-counter services has surged by 16.4% in just six months. This excitement coincides with a rise in cryptocurrency valuations (Bitcoin, Ethereum, Dogecoin, Solana, etc.), indicating a growing appetite among Russians for these digital assets.

In the void left by Binance, an army of local competitors has emerged. Five anonymous exchanges have seen their share of traffic explode, soaring from 39% to 64%. This meteoric rise shows that these newcomers are successfully capturing the wave of users seeking new platforms.

Russia: the rise of digital rubles

In Russia, cryptocurrencies are not just turning heads; they are also capturing attention and clicks. The Bank of Russia, author of a CBDC project, informs us that the number of unique users of crypto platforms has skyrocketed, with these Russian netizens seeking new digital territories for their investments. Each month, ever-increasing numbers connect to these sites, driving the proportion of Russian Internet visits to these sites ever higher.

And it’s not just a matter of clicks. Cryptocurrency flows, from Bitcoin to Ethereum to Tether and USD Coin, are soaring spectacularly. With 4.5 trillion rubles exchanged, or roughly 51 billion dollars, the semester has seen a 15.6% increase in transactions. This makes cryptos a pillar of the Russian financial landscape.

However, it’s not all roses in the world of virtual currencies. “rug pulls” – these crypto scams where developers run off with the funds—cast a sinister shadow. Beribit, a platform linked to a Ukrainian oligarch, recently disappeared, taking $4 million of its users’ money. A hard blow to investor confidence, who now demand safer alternatives.

The departure of Binance has shaken the Russian crypto market, making way for new players and increased user activity. But the road is fraught with obstacles, and the coming months will be crucial in defining the future of this vibrant digital landscape.