Russia, National currency-linked stablecoin consideration

Russia is considering issuing its own stablecoin based on the Ruble. This comes in response to the growing call for alternative payment methods following the event where Tether (USDT) linked to the US Dollar blocked wallets on Russian exchanges.

According to Reuters, Osman Kabaloev, deputy head of the Financial Policy Department of the Russian Ministry of Finance, stated, “This situation is an example that reveals the risks that can arise from dependence on stablecoins based on the US Dollar,” adding, “We need to consider models linked to other currencies, including internal payment methods similar to USDT.”

At the center of the controversy is the local Russian cryptocurrency exchange Garantex. In March, Tether, citing US and EU sanctions, blocked digital wallets belonging to Garantex and froze approximately 28 million dollars (about 39.7 billion Won) in USDT. In response, Garantex temporarily suspended all services, strongly protesting, declaring that “Tether has joined the war against the Russian cryptocurrency market.” The exchange claims that Tether has blocked about 2.5 billion Rubles (about 42.7 billion Won) in wallets.

Garantex is an exchange included on the sanctions list by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury, also accused of facilitating transactions for the Yemeni Houthi rebels. As a result, eight affiliated wallets have been included on the sanctions list, and this incident has led to discussions within the Russian government about establishing its own cryptocurrency payment methods.

Currently, discussions over stablecoin regulations are intensifying in the global market. The European Union is strengthening oversight through the MiCA regulatory framework, and the US Congress is pursuing new stablecoin legislation. Amid such trends, Russia is steadily exploring strategies to utilize cryptocurrency for international payments, moving away from the existing Dollar-based infrastructure.

If Russia actually develops its own stablecoin, it can be interpreted as a move to enhance independence in the international financial order as well as avoid sanctions. In the meantime, Russia's actions are likely to have a considerable impact on the cryptocurrency market as they align with the trend of de-dollarization.