Bitcoin liquidity is drying up in specific regions as a new pay-to-exit model quietly takes over

In December, Belarus enforced stricter platform blocking, limiting access to exchanges and tightening regulations around the High-Tech Park for its residents.

This action falls in line with a broader strategy employed across EMEA and APAC regions, utilizing telecom blacklists, removal from app stores, and Know Your Customer (KYC) requirements to influence who can access the same BTC and USDT markets.

As a result, the country is effectively reinstating capital controls—now digital in nature—where assets, including passports, IP addresses, and local licensing, determine access to trading platforms and the cost of exiting the market.

The Belarusian telecom registry, BelGIE, consistently updates its list of restricted domains to enhance its ISP-level blocking efforts.

Reports surfaced in December indicating new restrictions on foreign exchange platforms, alongside legal frameworks that limit transactions to High-Tech Park operators and curtail P2P trading.

Authorities have specifically cracked down on unlicensed exchanges, with recent EU sanctions prohibiting Belarusians from maintaining crypto wallets with EU providers, effective February 24, 2025.

Coverage by Onlíner indicates that the wallet ban has eliminated a crucial escape route for custody, forcing residents to trade through authorized HTP operators or seek alternative gray-market options.

The methods of enforcement are both efficient and rapid.

Blocking DNS and IP addresses redirects traffic at the carrier level, app stores eliminate mobile access, and exchanges impose strict KYC requirements that prevent new and existing users from trading based on residency.

In December, Russia’s actions, which included new blocks on platforms like Snapchat and restrictions on FaceTime, illustrated how swiftly content filters can be applied to consumer applications, as reported by Reuters.

Applying similar strategies to exchange domains, API gateways, and wallet interfaces results in immediate disconnections for retail users and small institutions, compelling them to operate within licensed local environments or through unregulated conduits.

This trend extends beyond Belarus and Russia

India heightened its crackdown on offshore platforms on October 1, 2025, when the Financial Intelligence Unit (FIU-IND) notified 25 Virtual Asset Service Providers (VASPs) to implement URL and app blocks for non-compliance with Anti-Money Laundering (AML) regulations, as reported by The Economic Times.

The pathway to compliance is clear: register, pay penalties, and operate under regulatory oversight.

Earlier in 2024, Binance registered with the FIU and subsequently incurred a penalty of ₹188.2 crore (approximately $2.25 million), according to Reuters.

Thailand formalized its regulatory approach on June 28, 2025, collaborating with law enforcement and the Digital Economy ministry to block Bybit, OKX, CoinEx, XT, and 1000X for operating without appropriate local licenses, as noted by the Thai SEC.

Indonesia restructured its oversight from Bappebti to the Financial Services Authority (OJK) on January 10, 2025, preparing for more stringent licensing requirements and tighter access controls, as outlined in the OJK’s joint statement.

The market structure is influenced by these regulations

As access restrictions are implemented, liquidity tends to concentrate on compliant platforms, with market activity becoming dependent on specific venues instead of on the assets themselves.

According to Kaiko’s 2025 analysis, the depth of BTC transactions remained stable on regulated exchanges, while altcoin liquidity decreased earlier in the year.

When jurisdictions impose restrictions via URL and app removals, the markets often face temporary disruptions, larger spreads, increased slippage, and higher premiums on local fiat and stablecoin pairs at the few remaining access points until flow stabilizes.

In the Philippines, similar actions against Binance mirrored withdrawal risks and restricted access to fiat trading.

Despite Belarus being minor in terms of global trading volume, its local regulations are still significant.

A hypothetical situation can illustrate the implications for market makers and retail traders in restricted markets.

Assuming local users make up a portion of taker volume on a platform V, a block may reduce local taker activity by α over a period of two to six weeks until the migration stabilizes. Market depth D responds with elasticity ε in the range of 0.4–0.7 for mid-cap assets.

The immediate change in depth is approximately ΔDepth ≈ −ε·α·s.

If local participation (s) is below 0.5% for major assets in Belarus, the global market for such assets remains largely unaffected. However, local trading venues, including those using BYN and HTP infrastructure, may experience thinning, leading to increased fees and wider bid-ask spreads as market makers account for the added risks associated with operational compliance.

For altcoins, the impact is more pronounced since market makers often handle smaller inventories and have limited hedging options across fragmented bookstores.

Regional flow data suggests that access restrictions and trading can coexist

Chainalysis identifies Europe as the largest crypto region by value received in 2025, with Russia driving EMEA inflows, reflecting a landscape where general bans and practical trading activities can occur simultaneously.

APAC exhibits the fastest upward trend in the latest index, with India taking the lead and the United States following closely, according to Chainalysis.

This indicates that Indian URL restrictions impact beyond domestic users, as large offshore exchanges facilitate global trading and liquidity, which can disrupt operations for desks outside of India.

We now observe three enforcement strategies across EMEA and APAC.

The first is a complete geo-block that directs traffic away through carriers and app stores, evident in Belarus and Thailand.

The second is a licensing requirement with local isolation, a tactic employed by Malaysia and Türkiye, per the Securities Commission Malaysia’s digital asset framework, which permits regulated domestic exchanges to capture market share without completely banning operations.

The third model is the register-to-reenter strategy seen in India, where notices, blockades, registrations, and fines prevent non-compliant volumes from entering the market while progressively channeling activity back to compliant exchanges.

Each regulatory model yields distinct effects on spreads and market depth, yet all contribute to the fragmentation of the overall market perspective.

Looking ahead to 2026, risks will cluster around updates to existing regulatory frameworks

Belarus may continue to enhance its blocking measures via BelGIE, intensifying pressure on P2P operators through additional ministerial directives as needed.

India could issue further FIU blocks if non-compliance persists post-October notices, prompting MeitY initiatives to enforce regulations through app stores and ISPs.

Thailand may extend prohibitions to wallet interfaces and domains attempting to circumvent existing restrictions, with SEC bulletins guiding the timing of such measures.

Pakistan’s policy direction shifts toward a regulated framework that may implement licensing for foreign platforms, while the UAE’s VARA prefers compliance-driven geo-fencing against unlicensed activities, as discussed in various market reports that channel rather than terminate flow.

Order routing dynamics will continue to evolve as exchanges tighten KYC regulations and telecom authorities impose further restrictions.

Utilizing API and IP geofencing will direct users toward VPNs, OTC desks, P2P platforms, and custodial networks, complicating transparent price discovery and hindering risk assessments reliant on consolidated order books.

In areas where access to exchanges is restricted, OTC trading volumes might increase, shifting custody risks to less regulated service providers, particularly where wallet access to EU-based services is prohibited for certain nationalities.

The dual-layer system in Belarus, with its HTP restrictions coupled with the EU wallet ban based on residency, increases the likelihood that residents may turn to unregulated custodianship lacking proper client asset protections.

For traders and treasury professionals, a sustainable approach involves mapping out access routes by jurisdiction, diversifying hedge strategies across compliant pools, and preparing for potential basis shifts on regional pairs following regulatory actions.

Kaiko’s exchange rankings can assist in determining venue selection and understanding market depth dynamics, while Chainalysis regional flow statistics can help gauge how quickly volumes adjust after ISP and application alterations.

Participants trading in altcoin markets should implement adequate buffers for slippage and working capital, since these markets tend to contract first when local takers withdraw.

For teams servicing regional clients, it is prudent to draw inventories from onshore platforms when feasible and to maintain redundant settlement channels to mitigate downtime caused by block orders.

Access barriers are shifting, and the price influence is becoming apparent

Compliance is evolving into a framework for gaining market share in APAC, where registration and penalties facilitate monitored activity in India, and licensing requirements create liquidity silos in EMEA without entirely prohibiting crypto operations.

The recent restrictions in Belarus illustrate how swiftly a nation can redefine the access framework regarding market visibility and associated costs.

Despite tightening controls in parts of EMEA, Europe continues to maintain its share of crypto value received. Additionally, the rapid adoption in APAC means that any measures restricting access in India can ripple through to global liquidity management.

Market depth now tends to cluster around a limited number of compliant platforms, which will influence strategies for hedging and managing inventory as jurisdictions alternate between geo-blocks, licensing, and supervised compliance pathways.

“The resurgence of capital controls is subtle, API-driven, and immediate,” a statement that is increasingly demonstrated with the recent spate of platform bans in Russia and the exchange-related restrictions rolled out across EMEA and APAC this year.

Compliance is becoming a deliberate strategy for capturing market share in APAC, exemplified by India’s model of registration, fines, and subsequent resumption of operations, which is already yielding results for significant platforms.

The dual framework in Belarus comprising the HTP perimeter and restrictions on EU wallet access highlights the shifted dynamics regarding custody and exit costs for residents, which is visibly reflected in the liquidity landscape.