- The deputy head of the Financial Policy Department has confirmed that Russian officials are considering creating a national stablecoin similar to USDT.
- This comes after Tether froze more than $30 million in USDT associated with Garantex, halting its operations and exposing Russia’s reliance on foreign-controlled stablecoins.
In a bid to increase its financial sovereignty, Russia’s Finance Ministry has proposed the development of a national stablecoin. According to April 16 reports by Reuters, Osman Kabaloev, Deputy Head of the Finance Ministry’s Financial Policy Department, emphasized the need for Russia to develop “internal tools similar to USDT,” potentially pegged to non-dollar currencies.
“We do not impose restrictions on the use of stablecoins within the experimental legal regime. Recent developments have shown that this instrument can pose risks for us,” Kabaloev said. The stablecoins will be backed by internationally recognized assets like gold, which would be an acceptable currency for cross-border payments.
As previously mentioned in a March report, the U.S. Department of Justice, along with German and Finnish authorities, froze domains linked to Garantex. Authorities alleged the exchange had processed over $96 billion in criminal proceeds since its launch in 2019. Tether, the largest stablecoin issuer, also froze digital wallets on Russian crypto exchange Garantex, freezing over 2.5 billion roubles worth $28 million in assets. This followed the European Union’s decision to include Garantex in its 16th package of sanctions on Russia, citing the exchange’s connection to sanctioned Russian banks and the facilitation of EU sanction evasion.
Garantex responded by freezing all services, including withdrawals, and warned that “all USDT in Russian wallets is now at risk.” The exchange had already been sanctioned by the United States in April 2022 on the basis of facilitating criminality, including ransomware attacks. The events point towards the risks of relying on foreign-controlled stablecoins to conduct cross-border settlements under the shadow of Western sanctions, which have become fiercer under the presidency of Donald Trump.
Perspectives on Russian Financial Regulators
While the Finance Ministry would like to issue a national stablecoin, the Bank of Russia is wary. The central bank has always opposed using private stablecoins because they are stable and pose risks to the national economy.
As part of its alignment with the BRICS alliance, Russia has been actively modernizing its financial infrastructure to counter monopoly-style tactics in the global financial system. These proposals aim to reduce dependence on traditional Western currencies like the U.S. dollar and the euro, currencies that have long been staples of global economic influence. The development comes after U.S. officials warned that any effort at introducing an independent BRICS-supported currency would be met with 100% tariffs and banishment from the U.S. market.
Meanwhile, on March 20, Evgeny Masharov, a member of Russia’s Civic Chamber, proposed the establishment of a state-supported cryptocurrency fund. The fund would be made up of assets confiscated during criminal cases, to invest these funds in social, environmental, and educational projects
Strengthening its roots in the crypto space even more, Moscow is going to host the 14th Blockchain Forum on April 23-24. The forum will welcome over 15,000 attendees from more than 130 countries and feature big names such as Justin Sun, Xinxi Wang the Litecoin Foundation Co-founder, and Stephan Lutz the CEO of BitMEX.
