Bitcoin Liquidity Crisis: Is a "Pay-to-Exit" Model Taking Over?

Belarus recently escalated its control over cryptocurrency access, implementing a series of blocks on exchanges and reinforcing restrictions within its High-Tech Park. This move isn't isolated; it's part of a growing trend across EMEA and APAC where governments are utilizing telecom blocklists, app store removals, and stringent KYC (Know Your Customer) requirements to dictate who can participate in Bitcoin (BTC) and Tether (USDT) markets. The practical outcome? A de facto return of capital controls, masked by digital infrastructure, where access – and therefore the price to exit – is determined by passports, IP addresses, and local licenses. This article dives deep into this evolving landscape, analyzing the implications for liquidity, market structure, and the future of crypto access.

The Expanding Perimeter: A Global Trend

Belarus’s actions are symptomatic of a broader strategy. Authorities are increasingly leveraging existing infrastructure – internet service providers (ISPs), app stores, and financial regulations – to control crypto access. This isn’t about banning crypto entirely; it’s about channeling it through approved avenues, often at a cost. The result is a “pay-to-exit” model, where users face increased friction and potentially higher fees to move their assets.

Belarus: A Case Study in Digital Control

Belarus’s telecom registry, BelGIE, continues to expand its list of blocked domains, targeting foreign exchange front-ends. Legal frameworks now confine dealing with Belarusian residents to High-Tech Park operators and severely restrict peer-to-peer (P2P) activity. Unregistered exchangers are being targeted, and new EU sanctions, effective February 24, 2025, prohibit Belarusians from holding wallets at EU-based providers. This effectively removes a common escape route, forcing residents to rely on approved HTP operators or navigate unregulated channels.

Russia’s Parallel Path

Russia’s December 2024 actions, including blocks on platforms like Snapchat and restrictions on FaceTime, demonstrate the speed at which content filters can be extended. Applying these same levers – blocking exchange domains, API gateways, and wallet user interfaces – immediately disconnects retail and small institutions, forcing them towards licensed local venues or unregulated bridges. This highlights the ease with which access can be curtailed.

Beyond Russia and Belarus: A Wider Net

The trend isn’t limited to Eastern Europe. Several other nations are implementing similar measures, albeit with varying approaches.

India’s Escalating Enforcement

On October 1, 2024, India’s Financial Intelligence Unit (FIU-IND) issued notices to 25 Virtual Asset Service Providers (VASPs) and ordered URL and app blocks for non-registration under Anti-Money Laundering (AML) rules. The path forward is clear: register, pay penalties, and operate under supervision. Binance’s registration with FIU-IND and subsequent ₹188.2 crore (approximately $2.25 million) penalty underscores this reality.

Thailand’s Direct Approach

Thailand took a more direct approach on June 28, 2024, coordinating with law enforcement and the Digital Economy ministry to block Bybit, OKX, CoinEx, XT, and 1000X for operating without a local license. This demonstrates a willingness to actively shut down access to non-compliant platforms.

Indonesia’s Regulatory Shift

Indonesia moved supervision of the crypto sector from Bappebti to the Financial Services Authority and Bank Indonesia on January 10, 2025. This administrative shift lays the groundwork for license-gated access and tighter on- and off-ramps, further restricting access to unregulated platforms.

Impact on Market Structure and Liquidity

These access controls have a significant impact on market structure and liquidity. Liquidity concentrates on compliant venues when access narrows, making aggregate depth venue-dependent rather than asset-dependent. Kaiko’s 2025 analysis shows that BTC depth remained relatively stable on well-regulated exchanges, while altcoin market depth declined earlier in the year.

When jurisdictions force exits through URL and app removals, markets typically experience short-term dislocations, wider spreads, higher slippage, and premiums on local fiat and stablecoin pairs on surviving ramps. The Philippines’ actions against Binance created similar patterns, highlighting the risks associated with withdrawal access and fiat rails.

A Simple Model for Assessing Impact

Even a relatively small market like Belarus can have ripple effects. If local users account for 's' share of taker volume on a venue 'V', a block reducing local taker flow by 'α' over 'T' weeks (2-6 weeks) can impact market depth 'D' with an elasticity 'ε' (0.4–0.7 for mid-caps). The near-term depth change is approximately ΔDepth ≈ −ε·α·s. If 's' is below 0.5% on major pairs, the global books may barely move, but local books – including BYN rails and HTP venues – can thin, widening fees and bid-ask spreads due to increased operational and compliance risk.

Altcoins are particularly vulnerable, as maker inventories are smaller and hedging routes are fewer and more fragmented.

Regional Flow Data: Usage Coexists with Control

Chainalysis data reveals a fascinating paradox: Europe remains the largest crypto region by value received in 2025, with Russia leading EMEA inflows. This suggests that headline blocks don’t necessarily equate to a cessation of crypto usage. Similarly, APAC shows the fastest adoption trend, with India and the United States leading the way. This indicates that access controls can coexist with continued crypto activity.

However, Indian URL blocks extend beyond domestic users, as large offshore venues serve global counterparties and liquidity providers. Closing these pipes, even temporarily, alters bridge depth, routing, and hedging costs for desks outside India.

Three Enforcement Models Emerge

Three distinct enforcement models are becoming apparent across EMEA and APAC:

• Full Geo-Block: Routing traffic away at the carrier layer and through app stores (Belarus, Thailand).
• License Gating with Onshore Silos: Creating market share for domestic regulated exchanges without a total ban (Malaysia, Türkiye).
• Register-to-Reenter Path: Notices, blocks, registration, and fines to strand non-compliant liquidity and pull volume back to compliant pools (India).

Each model has a different time profile for spreads and depth, but they all contribute to the fragmentation of the global order book.

Looking Ahead: Risks in 2026

The risks in 2026 center around updates to existing toolkits. Belarus could add more domains to BelGIE and increase pressure on P2P operators. India could issue more FIU blocks if October notices aren’t addressed. Thailand could extend blocks to wallet front-ends and domains attempting to circumvent existing restrictions. Pakistan is considering a regulated framework with access limits for foreign platforms, while the UAE’s VARA favors compliance-driven geo-fencing.

Order routing behavior will continue to shift as venues harden KYC perimeters and telecom regulators add blocks. API and IP geofences will push users towards VPNs, OTC desks, and P2P platforms, reducing price discovery and impairing risk models. OTC share will likely rise in areas with limited exchange access, and custody risk will migrate to less supervised providers, especially where EU wallet access is restricted.

Implications for Traders and Treasurers

The durable playbook for traders and treasurers is to map venue access by jurisdiction, segment hedging across licensed pools with stable rails, and expect repeated basis shocks after enforcement steps. Kaiko’s exchange rankings and Chainalysis regional flow data are valuable resources. Altcoin pairs require explicit buffers for slippage and working capital, as these books compress first when local takers disappear. Teams with regional customers should prioritize onshore venues and redundant settlement rails.

Compliance is increasingly becoming a market share strategy in APAC, with India’s “register, pay, and resume” model gaining traction. Belarus’s dual wall – HTP perimeter and EU wallet access limits – highlights the changing cost of custody and exit. The price impact of these access controls is already visible.

The access wall is moving, and the price impact is already being felt.

Jurisdiction	Tool	Action	Effective Window	Primary Source
Belarus	ISP blocklist, HTP perimeter	Expanded restricted domains, HTP-only dealing, EU wallet ban for residents	Dec 2024, EU wallet rule in force Feb 24, 2025	BelGIE, Belsat, Onlíner
India	FIU notices, URL/app blocks	25 offshore VASPs noticed, register-to-reenter path, fines	Oct 1, 2024 notices, Binance fine June 20, 2024	The Economic Times
Thailand	ISP blocks for unlicensed CEXs	Blocked Bybit, OKX, CoinEx, XT, 1000X	In force June 28, 2024	The Block
Indonesia	Supervisory migration	Oversight moved to OJK and Bank Indonesia	Jan 10, 2025	OJK
Russia	Broad platform blocks	New site and app restrictions	Dec 4, 2024	Reuters

“The return of capital controls is stealth, API level, and instantaneous,” a framing that accurately reflects the recent wave of platform blocks and exchange restrictions. The future of crypto access hinges on navigating this increasingly complex regulatory landscape.