Amid mounting international sanctions over its invasion of Ukraine, Russia has turned its focus to cryptocurrencies, raising fears in the West that the government will use them to avoid financial constraints. As a result, the urge to build its own crypto market infrastructure for digital currencies grows even stronger.
A Russian cryptocurrency market would allow Russians to not only withdraw their funds but also perform other transactions. According to the Finance Ministry, an increasing number of them want to move their currency to Russia. Some trading sites, such as the biggest South Korean exchanges, have already blocked Russian users’ access.
Sanctions have resulted in restrictions on international exchanges for Russian nationals, and the incentives to establish Russian infrastructure for the cryptocurrency market have intensified. The comment was made by Ivan Chebeskov, head of the Ministry of Finance’s Financial Policy Department, during the International Banking Day conference.
According to the high-ranking official, it has become extremely difficult for Russians who have invested in cryptocurrencies overseas to withdraw their cash and convert them into fiat money. Foreign authorities are suddenly concerned about Russian citizenship; money is being stopped, and new accounts are being rejected.
The law “On Digital Financial Assets,” which entered into effect in January 2021, only partially regulates the Russian crypto market. The future of cryptocurrencies is still being debated in Moscow, with the Central Bank of Russia proposing a blanket ban while most institutions back Minfin’s plan to licence the business under strong government oversight.
The federal government adopted a regulation plan based on the ministry’s approach in February. Later that month, the agency introduced a new law titled “On Digital Currency,” which established extensive rules for the sector. The Ministry of Finance is also attempting to address the issues around crypto income taxation.
