- No decision has been made yet
- Access is not for everyone
- Sanctions may reach cryptocurrency as well
- Western reaction
It is planned to create at least two Russian crypto exchanges to support foreign economic activity. The Ministry of Finance is looking for a way out of the current economic situation – the imposition of sanctions makes foreign economic activity difficult. Therefore, the issue of opening their own crypto exchanges in Moscow and St. Petersburg is being considered.
For one they want to use the base of the St. Petersburg Currency Exchange (SPVB). The second will be in Moscow, but it has not yet been decided whether it will be created on the basis of Moscow Exchange or separately. Now the main ideas for new crypto exchanges are related to the creation of stablecoins.
No decision has been made yet
Finance Minister Anton Siluanov said that the Bank of Russia and the Ministry of Finance are discussing the legalization of crypto exchanges, but have not yet reached a consensus. The creation of crypto exchanges “is still in a gray zone, and is neither allowed nor prohibited.” He promised that in the fall a corresponding legislative decision will be prepared.
The need for it is caused by international sanctions. “We see the problems that are created for us, related, among other things, to settlements. The use of DFA in cross-border settlements largely allows us to reduce the pressure under this restriction,” the finance minister said.
Times are still tough for Russia’s banking sector: difficulties in international settlements, even with friendly countries, complicate foreign economic activity. In April 2024, a situation occurred when electronics manufacturers started receiving letters from Chinese component suppliers saying that payments from a Russian legal entity did not pass through Chinese banks.
In the absence of a legalization law, only an experimental legal regime (also referred to as the regulatory sandbox) remains the only regulatory option for potential crypto exchanges, said Mikhail Uspensky, a member of the expert council on legislative regulation of cryptocurrencies of the Russian State Duma.
According to the current legislation, Russia can introduce special legal regulation for projects in the field of digital innovation, the regulatory sandbox can be introduced, including in the financial market. In this case, approved projects would be removed from the scope of federal laws.
Access is not for everyone
If Russian crypto exchanges start operating, small and medium-sized businesses and individuals are unlikely to gain access to them immediately, Uspensky believes. “It is important to emphasize once again that the contours of the future experiment are given entirely at the discretion of the regulator,” he noted and added that at first, a narrow circle of individuals, the largest exporters and importers and businesses from their perimeter, will use the exchange in test mode.
Nikita Vassev, founder of TerraCrypto, expressed the opinion that not everyone will be willing to use such an exchange: “Those who have a choice will not exchange convenient trading platforms, which have been improved for years by the best developers, for domestic platforms. The only scenario in which a market participant will go to a domestic platform is the total lack of any other options”.
Sanctions may reach cryptocurrency as well
In March 2024, Russian President Vladimir Putin signed a law authorizing the use of digital financial assets (DFAs) for international payments. However, there are some complications with the use of these assets – foreign companies fear the risks of secondary sanctions.
If privacy is breached, information about blockchain transactions could go on sanctions lists. “Simply put, if information about cryptocurrency bought on a Russian exchange leaks into the public domain, then with the help of special technical means it can be easy to trace and mark absolutely all transactions as suspicious, significantly spoiling the life not only of the participants in transactions, but also of the future owners of digital currency, including those completely unattached to Russia,” Uspensky said.
Western reaction
George Tung, host of CryptosRUs, explains that the decision to create crypto exchanges, motivated by Russia’s leadership among countries hit by sanctions, reflects a broader strategy of distancing itself from the US dollar. This development could signal a shift in global financial dynamics, especially as other countries view Bitcoin accumulation as part of their strategic reserves.
George Tung emphasizes that the new exchanges will avoid any trade involving the US dollar, in line with the country’s desire to operate independently of Western financial systems. Instead, the focus will be on the fiat currencies of the BRICS countries, in line with the broader trend of dedollarization among these countries. Tung points out that Russia, like China, may be keeping a close eye on the United States’ potential Bitcoin hoarding plans while considering similar strategies for its own reserves.
Increased state-level Bitcoin buying could lead to a supply crisis. With a limited amount of Bitcoin available, increased demand from sovereign states could significantly impact the market. Russia’s recent resumption of cryptocurrency mining further emphasizes this intention, as the country appears to be positioning itself as a protector of as much digital currency as possible. This once again shows that Russian cryptocurrency exchanges may be coming soon.
This shift towards the use of cryptocurrencies by major global players like Russia and China could signal a new era in the digital currency space. If more countries start hoarding Bitcoin, the scarcity of this asset could increase its value, potentially changing the global financial landscape.
