Russia Eyes Own Stablecoins After USDT Block

Russia Considers Launching its Own Stablecoins

A high-ranking official from Russia's Ministry of Finance has recently urged the country to develop its own stablecoins. This follows the recent blocking of $30 million worth of Tether (USDT) held in Russia-linked digital wallets.

Key Developments:

• Osman Kabaloev, deputy director of the Ministry of Finance’s financial policy department, publicly supports the initiative.
• The freezing of USDT assets has intensified discussions regarding the creation of Russian stablecoins pegged to currencies other than the US dollar.
• This push comes amidst increased Western sanctions targeting Russian financial institutions and crypto exchanges.

The impetus for this move stems from the February sanctions imposed by the European Union (EU) on Garantex, a major Russian cryptocurrency exchange. The EU cited Garantex’s close ties to sanctioned Russian banks and its role in facilitating sanctions evasion. Subsequently, Tether, the issuer of USDT, blocked Garantex’s wallets containing over 2.5 billion rubles ($30 million), leading to a temporary suspension of operations and highlighting the vulnerabilities of relying on foreign stablecoins.

The situation further escalated with the seizure of Garantex's infrastructure by US and European law enforcement agencies and the subsequent indictment of key operators for money laundering and cybercrime. The DOJ estimates Garantex processed at least $96 billion in illicit transactions.

While Russia permits experimental use of crypto in international payments, the impact of sanctions has significantly increased the difficulties. Despite the Bank of Russia Governor's opposition to using crypto for domestic payments, Russian firms continue to explore the potential for international transactions using cryptocurrencies including Bitcoin and USDT. Reports surfaced in March of Russia using crypto to conduct oil trades with China and India.

Russia's exploration of alternative solutions, including stablecoins and the digital ruble, underscores the nation’s ongoing efforts to navigate Western sanctions. However, the success of these initiatives remains uncertain.

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