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Ukraine has paused its planned integration of Binance’s crypto payment service into the government’s official app following backlash from the nation’s crypto community.
That integration is now pending to “clarify a few moments” first, according to a government minister.
The outrage was sparked by government plans to integrate the service from the world’s largest exchange by volume at a time when Binance continues to do business with Russia, which invaded Ukraine in February. The nation’s crypto exchanges don’t want a foreign company to provide a service they can do as well. They showed their displeasure by blocking trades of Binance’s BNB token on their platforms.
Binance had integrated its know-your-customer (KYC) process into Ukraine’s Diia mobile app in late October, local crypto media Forklog reported. Diia allows Ukrainians to make digital copies of their state-issued documents and government services online.
The article did not include any official comment from the Ministry of Digital Transformation, the government body responsible for Ukraine’s IT development that led the development and adoption of Diia.
Using Binance’s system will allow Ukrainians to register on the crypto exchange faster with their Diia profile, said Kyrylo Khomyakov, general manager of Binance in Ukraine, to Forklog.
Alex Bornyakov, deputy minister of digital transformation, told CoinDesk that the integration could, in principle, go further and include crypto payments in Diia via Binance.
“Diia already has some functionality for payments, and building in a crypto ramp is generally a good idea,” he said. But not for now.
A Binance spokesperson said in a written statement to CoinDesk that “it is early to discuss the initiative.”
Binance “suggests our expertise and technology to integrate blockchain into government services when the government is ready and chooses preferred areas for that,” the spokesperson said.
Public protest
One of those “moments” that need clarification could be the immediate negative feedback from the local crypto community. Exchanges Kuna, WhiteBit and the crypto loan service Trustee Plus presented a petition to the President of Ukraine Volodymyr Zelensky asking him to block the movement. They also froze trading of BNB, Binance’s token, on their platforms.
“All the attention is now on Binance, and local exchanges are blown away,” said a Ukrainian crypto entrepreneur who asked not to be named.
The head of Trustee Plus, Vadym Hrusha, told CoinDesk that it is simply wrong to integrate a government service with a foreign company. Ukraine has its own local crypto exchanges and payment services, “with a product no worse than Binance,” he said, referring to Kuna and WhiteBit, both of which have their own payment service.
While Kuna, WhiteBit and Trustee are all officially registered outside Ukraine, the founders and teams are Ukrainian, and all three were based in the country before moving after the invasion of Ukraine.
“It’s unpatriotic and unsafe for the government,” Hrusha said. “In addition, Binance is a Chinese company, and China is not a friend of Ukraine. We do not know what data they send and to whom. At any moment, we (Ukrainians) can be banned.”
Binance does not advertise itself as a Chinese company, and the exchange’s founder and CEO, China-born Changeng Zhao, grew up in Canada. He has long insisted that Binance is not a Chinese firm.
Question of sanctions
Hrusha said that Binance “does not have a direct position on Ukraine” because the exchange does not exclude Russian users, as some European and American exchanges did after the last round of EU sanctions Europe against Russia. Zhao said that Binance’s EU entities will not serve Russians, but the company’s other subsidiaries will not necessarily expel Russian users.
This stance did not satisfy the Ukrainian crypto community. Michael Chobanyan, CEO of Kuna exchange, told CoinDesk that the community effectively blocked the integration project. Chobanyan also wants Binance to remove trading pairs with the Russian ruble, which it believes helps Russians evade sanctions.
Since Russia invaded Ukraine in February and started a full-scale war, relations between the two countries’ crypto communities have deteriorated. For Chobanyan, the final straw was this fall’s Blockchain Life conference in Moscow, which went ahead as planned despite Russia’s assault on its neighbor.
“There is a war in my country, houses are destroyed, all my childhood memories are destroyed, and at the same time they are holding a conference, talking about how great everything is,” said Chobanyan. He added after being against crypto sanctions at first, now he has become more radical.
“Either you work in Russia, or you work in the civilized world,” he said.
A Ukrainian crypto entrepreneur, who asked not to be named, told CoinDesk that Ukrainian startups have come to him and asked to remove support for Binance Smart Chain, in protest against Binance.
He admitted that he would be happy if Binance removed Russian ruble trading pairs to put additional pressure on the Russians and encourage them to do something about their war-torn political regime in Ukraine.
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