Deribit Exits Russian Market Amid EU Sanctions: What It Means for Crypto Traders

Crypto derivatives exchange Deribit has officially pulled out of the Russian market due to new sanctions imposed by the European Union. The company, based in the Netherlands, announced that it can no longer provide services to Russian citizens and residents unless they meet specific conditions. Russians with dual citizenship in an EEA country or Switzerland, or those living there permanently, can still use Deribit. However, Russians living in the UAE and all Russian companies are banned from the platform.

In their statement, Deribit said it’s following EU rules that ban European crypto companies from serving Russian citizens or businesses after Russia’s invasion of Ukraine as per the report. Moreover, the company believes that the crypto market should be open to all, and Russia’s new regulations are taking away that freedom from Russian citizens, making it a costly affair for traders. As a result, they are moving out to opt for a more favorable regulatory environment.

Why Russia Relies on Crypto

Since the conflict with Ukraine, Russia has been hit with heavy international sanctions. The country was even cut off from the SWIFT system, making it hard to process international payments. As a workaround, Russian companies have turned to cryptocurrencies like Bitcoin for cross-border transactions. Finance Minister Anton Siluanov confirmed this strategy, and even government officials supported it at last year’s BRICS Summit. However, using crypto for payments within Russia is still banned.

What’s Next for Russian Traders?

Deribit previously operated in Russia despite U.S. sanctions, but the new EU Rules left the company with no choice but to exit. Moreover, following the rule, the exchange will no longer operate in Russia. From February 17, new trades will be blocked, and by March 29, full access will be revoked.

In 2023, Deribit moved its operations to Dubai to handle regulatory pressures better. Still, Russians living in Dubai are not allowed to register on the platform.

Deribit’s departure is a big deal because it shows how even global crypto exchanges are feeling the heat from geopolitical tensions. For Russian traders, this means fewer options to access major crypto platforms, making it harder to navigate the international financial system. However, this decision could affect Deribit’s operations more than the Russian crypto market.

Potential Migration to Alternative Platforms

With Deribit exiting, Russian traders are likely to seek alternative platforms. Many may shift to decentralized exchanges (DEXs) like Uniswap and dYdX, which are harder to regulate. Centralized exchanges that are not bound by EU regulations, such as OKX, Bybit, and some offshore platforms, could also see an influx of Russian users. Monitoring changes in trading volumes on these platforms could provide insights into Russia’s crypto strategy post-Deribit.

Future Sanctions and Regulatory Uncertainty

The EU’s decision to enforce these sanctions raises the question of whether other major exchanges will follow suit. Will Binance, Bybit, or other large exchanges take similar actions? If more platforms withdraw, Russian traders might be pushed even further into DeFi solutions and peer-to-peer (P2P) trading.

Dubai’s Role as a Crypto Hub

Dubai has positioned itself as a major global crypto hub, but Deribit’s ban on Russian users even after relocating there suggests a tightening regulatory stance. If Dubai imposes stricter rules on Russian traders, other UAE-based exchanges might face similar pressures. This could impact Dubai’s attractiveness as a crypto-friendly jurisdiction for Russian investors.

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BRICS and Crypto Alternatives

Russia has been exploring BRICS-backed financial alternatives, including a potential BRICS digital currency. With China, India, and Brazil showing increased interest in crypto-based payment solutions, Russia may shift toward collaborations within the BRICS framework to bypass Western restrictions. How this impacts global crypto adoption remains to be seen.

Impact on Deribit’s Market Position

By cutting off Russian traders, Deribit risks losing a significant portion of its user base and trading volume. Will this decision weaken Deribit’s position against competitors who continue to serve Russian clients? The long-term effects on its liquidity and competitiveness should be closely watched.

As geopolitical tensions continue shaping the crypto landscape, the coming months will reveal whether Deribit’s exit is a one-off case or a sign of a broader trend of exchanges distancing themselves from Russian users.