With sanctions cutting off Russia from global finances, Moscow’s motivation to establish a domestic market infrastructure for digital assets grows, a top official at the Russian finance ministry has noted. This comment is made as Russians lose access to crypto-platforms abroad.
Russia recognizes the need for a local crypto assets market
Russia is turning to cryptocurrency amid growing international sanctions for the invasion of Ukraine. However, West-based concerns are increasing that Russia may be using them to bypass financial regulations. Russians find it more difficult to cash out their crypto holdings due to the penalties.
As sanctions have imposed restrictions on Russian citizens trading in foreign currencies, the incentives for building the Russian cryptocurrency market infrastructure have increased. Tass reports that Ivan Chebeskov (director of the Financial Policy Department of Ministry of Finance) made the comment during the International Banking Day conference.
The high-ranking official stated that it has been difficult for Russians to convert their cryptocurrencies into fiat currency and withdraw the funds they have already invested abroad in cryptocurrency. Russian citizenship is now a concern to foreign regulators. The money is being blocked and new accounts denied. Chebeskov explained that:
This makes it even more important to create the Russian infrastructure of digital currencies.
Russians could withdraw their funds and also make other financial transactions through a Russian crypto-market. The Finance Ministry reports that a rising number of these people are ready to send their money to Russia. For Russian traders, some trading platforms have restrictions, including the most prominent South Korean exchanges.
The Russian crypto space remains only partially regulated with the law “On Digital Financial Assets” which went into force in January, 2021. Authorities in Moscow are still discussing the future of cryptocurrencies, with the Central Bank of Russia suggesting a blanket ban while most institutions support the Minfin’s proposal to legalize the industry under strict government control.
In February, the federal government approved a regulatory plan based on the ministry’s concept. Later that month, the department submitted a new bill “On Digital Currency” introducing comprehensive rules for the sector. According to the Tass news agency, the Ministry of Finance also works on crypto income taxation.
Is Russia likely to take action soon in order to establish its own cryptocurrency market infrastructure? Please share your thoughts in the comment section.
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