Russia Drops Plans for State-Run Crypto Exchange

Russian lawmakers have decided to end plans for creating a state-owned cryptocurrency exchange, planning instead to set rules and regulations for already existing enterprises, a Russian news outlet reported Sunday. 

Colin Wu of Wu Blockchain broke the story on Twitter early Monday morning. He linked a translation of a Russian news outlet that explained that the country’s new focus would be to allow private companies to build crypto exchanges

According to the news report, Ivan Chebeskov, Director of the Financial Policy Department of the Ministry of Finance for the Russian Federation, said, “The [Ministry] did not support the establishment of one national crypto-exchange.” The idea, instead, is to “legally regulate the possibility of creating such sites by business.”

Europe Bans All Crypto Wallet Services to Russia in New Sanctions Package

The European Union has placed a blanket ban on all crypto services to Russian entities as part of its eighth round of sanctions against the country.  “The existing prohibitions on crypto assets have been tightened by banning all crypto-asset wallets, accounts, or custody services, irrespective of the amount of the wallet,” read the European Commission’s press release on Thursday.  The original limit, established in April, allowed such services to continue servicing Russian wallets holding €10,00...

Anatoly Aksakov, head of the Russian lower house committee on financial markets, added, “Instead of creating one national crypto exchange, it is planned to establish rules for the establishment and operation of such infrastructures.”

He added that crypto exchanges will be allowed to facilitate cross border payments, although he did not specify which ones, and acknowledged that they would probably face new restrictions. 

Izvestia, the Russian outlet that published the story, reported that the Central Bank will “probably” regulate the work of these platforms, and that the institution will manage international settlements within the regulatory framework of the country. 

Several of the private crypto operators within the Russian Federation were encouraged by the news. 

“This will help minimize the risks of sanctions, cyber attacks on infrastructure, and eliminate possible market monopolies,” Oleg Ogienko of BitRiver, a cryptocurrency mining operation that operates in Russia, told Izvestia. Reinforcing this view, commercial director for GIS Mining, Ivan Gostev, said this would “allow for more competitive and innovative companies to develop.”

Russia Wants to Use Stablecoins to Get Around Western Sanctions

Russia is advancing its crypto strategy to circumvent Western sanctions.  Deputy Finance Minister Alexey Moiseyev today said the country is exploring stablecoins to make payments with “friendly countries,” according to Russian state news agency Tass.  The country’s biggest news agency quoted Moiseyev saying that Russia is working to “create bilateral platforms” with “tokenized instruments” to avoid using U.S. dollars and euros.  Stablecoins are a type of cryptocurrency pegged to another asset, l...

The private sector’s positive view should come as no surprise, as Russia ranks #137 of 180 countries on the 2022 Global Corruptions Index, suggesting the need for caution in their stately endeavors. 

Russian authorities have been running hot and cold with the digital asset space for years. Early last year, the Bank of Russia proposed an outright ban on crypto payments, and a month later the Ministry of Finance submitted a proposal for Bitcoin regulations. Later, Vladimir Putin signed a law to outlaw payments in digital assets, only for the country to investigate stablecoins as a way to bypass sanctions. 

Today’s news comes amid ongoing Western-led financial sanctions against Russia after its invasion of Ukraine. Despite the history of mixed signals, today potentially marks a new chapter in the government’s relationship with cryptocurrencies.