Crypto news on WalletConnect restrictions in Russia: compliance with OFAC guidelines



Crypto news: WalletConnect recently restricted the use of its service in Russia, following sanctions guidelines imposed by the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department. 

See below for full details. 

The impact of compliance restrictions on the WalletConnect crypto service in Russia: latest news 

As anticipated, according to the latest news WalletConnect, a start-up in the web3 sector that facilitates the linking of crypto wallets such as MetaMask, recently announced the restriction of access to its services for customers in Russia.

The company used the X platform to spread the news and explain the reasons for this restriction. According to the official post, in fact, it reads the following: 

“Following recent legal guidelines and OFAC directives, WalletConnect has limited the availability of its protocol in Russia.”

Recall that OFAC represents the Office of Foreign Assets Control, an agency of the U.S. Treasury.

WalletConnect CEO Pedro Gomes said the company implemented the user restriction in Russia earlier this week. 

Since 2021, OFAC has focused its attention on the flow of cryptocurrency into Russia, especially following the escalation of the Russia-Ukraine war, leading to increased sanctions by Western countries against Russia.

Gomes also tried to explain how Ukraine was temporarily involved, debunking alleged misinformation. In fact, he stated the following: 

“As a temporary measure, we have restricted IP addresses from Ukraine until we can bring the areas not affected by sanctions back into compliance. There were erroneous reports claiming they had blocked other countries not under sanctions. We want to confirm that no other countries have been affected by these restrictions.”

More news from Russia: integrating cryptocurrencies into the domestic financial landscape

According to other news, the Russian government is outlining a regulatory framework to allow state-owned companies to participate in the cryptocurrency market by tracking crypto transactions.

In order to facilitate the entry of state-owned companies into the cryptocurrency market, one Russian bank has initiated surveillance of the activities of its clients operating in this sector.

In an interview with Parlamenstakaya Gazeta, MP Anton Tkachev indicated that this initiative is currently in the experimental stage. However, if it proves successful, it could be expanded to the state level. 

Tkachev did not disclose information about the bank involved or the criteria used to identify customers interested in cryptocurrencies.

The stated goal is to allow state-owned companies to conduct cryptocurrency transactions, especially considering the restrictions imposed by Western sanctions that limit Russia’s options in maintaining international trade relations.

Although details of the pilot project have not been revealed, Tkachev predicted that Russian state-owned companies will likely begin conducting crypto transactions as early as the first half of the following year. 

He also reported that a total of 13 million cryptocurrency wallets were registered in Russia in 2022, without specifying further details on this statistic.

In addition, in mid-September 2023, Ivan Chebeskov, an official in the Russian Ministry of Finance, stated the government’s intention to revive the local financial market by tapping into existing liquidity in the decentralized finance sector.

However, it is not yet clear how the Kremlin plans to translate this goal into reality. 

This is because of President Vladimir Putin‘s signing of a bill that, in practice, bans cryptocurrency payments nationwide. This law continues to prevent cryptocurrency-related companies from operating in Russia.

A step back: previous U.S. sanctions against crypto exchange Suex

As anticipated above, some time ago The U.S. Treasury Department, through the Office of Foreign Asset Control, declared the implementation of a new set of sanctions targeted at the over-the-counter cryptocurrency exchange, Suex.

Although officially registered in Prague, Suex has physical offices in Moscow and St. Petersburg. 

According to government authorities, it emerged at the time that Suex had facilitated withdrawals of funds from ransomware groups, scammers and the defunct BTC-e cryptocurrency exchange, which was shut down years ago by the U.S. Department of Justice.

The list provided by OFAC included a number of BTC, ETH, and Tether addresses, for a total of twenty-five specific addresses.

During its investigation of Suex, the Office of Foreign Asset Control had also received assistance from Chainalysis, a company that specializes in analyzing cryptocurrency transactions.