- Russia‘s Finance Ministry official proposes creating a national stablecoin for international trade amid sanctions.
- Russia seeks alternatives after Tether froze $28.5 million linked to sanctioned Russian crypto exchange Garantex.
- Russia already has experimental tokenization programs and is developing a digital ruble for cross-border payments.
Osman Kabaloev, a Deputy Director at the Russian Finance Ministry, has proposed that Russia develop its own stablecoin to facilitate international trade payments while navigating around sanctions. The suggestion comes after Tether recently froze $28.5 million belonging to sanctioned Russian crypto exchange Garantex, forcing the platform to suspend operations, as western sanctions continue to limit Russia’s access to the global SWIFT payment system.
Speaking at a conference organized by the Association of Russian Banks, Kabaloev referenced the need for domestic financial instruments similar to USDT but potentially tied to alternative currencies. “That blocking that recently happened… makes us think that we need to look at creating internal instruments like USDT, possibly tied to other currencies, like they do in the Emirates – a stablecoin for the dirham – and in many other countries,” he stated, according to Reuters.
Kabaloev pointed to the AE Coin, a dirham-based stablecoin recently authorized by the UAE central bank, as a potential model. This isn’t Russia’s first exploration of stablecoin development – reports from last August indicated plans for stablecoins based on the Chinese yuan or a basket of BRICS currencies. The yuan has particular relevance as Russia has significantly increased its cross-border payments in the Chinese currency amid western sanctions.
Russia’s Existing Digital Finance Framework
Russia currently operates two experimental programs that could support international payments. The first is its digital financial asset (DFA) issuance system, a regulated tokenization framework established before the Ukraine invasion. This system supports tokenized assets like Gold and oil, with Russia and Iran reportedly collaborating on using such assets for payments.
While DFAs were initially designed for domestic investments, Russia expanded their use for cross-border payments through legislation passed approximately a year ago. However, the Russian ratings agency ACRA has highlighted challenges for foreign DFA users who must onboard with Russian banks.
Expanding Digital Payment Options
Despite the Russian central bank’s historical skepticism toward cryptocurrencies, the government launched an experimental program late last year permitting cryptocurrency use for imports and exports. Kabaloev confirmed progress in this area, stating, “Pilot transactions were conducted at the end of December, and now the mechanism is gaining momentum. Therefore, we hope that we will only strengthen and expand this area.”
Simultaneously, Russia continues development of a digital ruble central bank digital currency (CBDC) and is participating in the BRICS Bridge initiative – a planned cross-border CBDC payment system designed to facilitate local currency payments among the ten BRICS member nations.
The push for digital payment alternatives underscores Russia’s ongoing efforts to develop financial infrastructure that can operate independently of western-controlled systems amid continuing sanctions.
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