Several notable cryptocurrency developments emerged from Russia in early March. Some highlight the sector’s growth, while others reveal vulnerabilities that need addressing. Let’s explore these stories to assess whether the Kremlin might adopt a more favorable stance towards crypto.
### Crypto Investment Testing
The landscape for cryptocurrency in Russia remains quite strict—while residents can buy and hold crypto assets, transactions using crypto as payment are prohibited. Additionally, crypto holdings are subject to taxation, and although mining is permitted, it faces temporary bans in certain areas.
On March 12, the central bank proposed allowing a select group of “particularly qualified” investors to engage in the buying and selling of cryptocurrency. To qualify, investors must have earned over 50 million rubles (around $584,000) in the past year or possess deposits exceeding 100 million rubles (nearly $1.17 million). Corporate investors are also included in this trading allowance.
This initiative was praised in media reports as a positive move towards crypto acceptance. However, it is crucial to note that the central bank intends to explicitly prohibit cryptocurrency transactions among residents who do not meet the criteria of the qualified investors. As a result, this policy permits trading for the wealthier class while effectively restricting it for the majority of the population.
At this stage, it remains unclear whether this proposal will be implemented and how strict the enforcement of the regulations will be.
### Russia’s Oil Trade with India and China
For years, the Russian President has discussed the need for de-dollarization. Occasionally, there are indications that the Chinese yuan could replace the dollar; however, stringent capital controls pose challenges.
With the increasing pressure from Western sanctions and severed relationships, Russia has turned to Bitcoin for international trade to circumvent these restrictions.
On March 14, reports surfaced that Russia was utilizing Bitcoin, USDT, and Ether in its oil transactions with China and India, aimed at easing conversion between the Russian ruble, Chinese yuan, and Indian rupee while avoiding sanction-related hurdles.
Sources indicated that even if sanctions were to be lifted, the trend of using digital assets is likely to persist due to their operational efficiency. Last summer, Russia introduced legislation encouraging businesses to utilize cryptocurrency for international trade as a means to circumvent Western sanctions. Currently, only a small percentage of Russia’s oil trades occur using cryptocurrency, but the volume is on the rise.
This situation illustrates that the legal framework established by the Kremlin is appealing to businesses not only as a workaround for sanctions but also as an efficient trading avenue. Whether the government will permit broader crypto usage remains uncertain, given the Kremlin’s historically cautious approach to the sector.
### Garantex vs Tether
While Russia employs Tether’s USDT to avoid sanctions, Tether is attempting to underscore its commitment to compliance. A notable instance is Tether’s decision to freeze all USDT on the major Russian exchange Garantex, which is under sanctions from European and U.S. authorities.
By freezing $27 million worth of USDT on March 6—just a week after Garantex was sanctioned—the stablecoin provider effectively hindered the exchange’s operations. Garantex referred to this action as “a war on the Russian crypto market” and subsequently suspended all transactions for an unspecified duration, offering to resolve issues with clients individually at their office. The U.S. had previously imposed sanctions on Garantex in April 2022.
Earlier, Binance announced its intention to delist USDT (alongside other stablecoins) for users in the European Economic Area due to non-compliance with new regulatory standards in Europe. Tether’s future appears increasingly ambiguous as regulations governing stablecoins evolve in both the U.S. and Europe.
The decision to freeze millions of USDT on the sanctioned Garantex likely serves as an effort to restore Tether’s reputation as a compliant entity during a time of intensified scrutiny on stablecoins. It’s noteworthy that many other exchanges continue to offer services to Russian customers. According to a recent investigation, Garantex has rebranded itself as a new exchange called Grinex.
### Digital Ruble Launch Postponement
Lastly, the reason behind the postponement of the Digital Ruble’s launch has come to light. Unlike the U.S., Russia intends to leverage a national CBDC to enhance governmental oversight over its citizens.
Originally set to launch in the summer of 2025, the timeline for the Digital Ruble has altered, with no specific date currently established for its release.
According to a report, the delay is attributed to the technical unpreparedness of approximately 30% of banks to handle digital currencies, with only about 20% indicating readiness for the launch. Nonetheless, Russia remains committed to its CBDC ambitions.
On March 17, it was reported that pilot testing for the Digital Ruble will occur in the Tatarstan region during the latter half of 2025.