The whole goal is obviously making any OTC operative impossible at the regulatory level, to the point users feel asphyxiated and wouldn't even bother withdrawing their funds out of exchanges.
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The only upside is not every country feels the same way about this issue. All of the giant surveillance state governments do (US, Russia, China), but there are some countries that have taken a more laissez-faire approach because they see Bitcoin as being able to help their people save money by not having to pay it to remittance companies like Western Union. For example, the Philippines has made it rather easy for e-wallet providers to support crypto -- why should they care if it takes a chunk out of profits for Western Union and Moneygram? If it can help their overseas workers send more money back home and into their own economy, they're all for it.
There are still no laws on cryptocurrency in Russia, so there is a lot of freedom with cryptocurrencies. The general law has been adopted, but it applies more to digital assets that are issued by banks and companies on centralized platforms (such as blockchain).
And the law on cryptocurrencies cannot work without instructions, clarifications, tax declaration forms, and so on. Therefore, you can work honestly and pay 4-6% tax after exchanging cryptocurrency for fiat.