Russia could be pushing to create its own stablecoin, after Tether frozen wallets tied to an exchange sanctioned by the US government.
Osman Kabaloev, deputy finance minister of the Russian Federation, told local media that a stablecoin pegged to rubles would be a good alternative to Tether’s USDT.
He made his comments just weeks after Tether frozen USDT worth $27-28million on the wallets of Garantex, an exchange in Russia under international sanctions.
Kabaloev thinks that these restrictions exposed the major weakness in Russia’s infrastructure of digital finance, which is its reliance on stablecoins issued by foreign countries.
The tensions began to escalate in early March, when German, Finnish, and U.S. authorities took down domains related to Garantex.
The Office of Foreign Assets Control of the U.S. Treasury imposed new sanctions just days after, accusing exchange of launder funds and processing transaction for sanctioned parties like the Houthi Movement.
Garantex accused Tether “of entering the war against Russian crypto markets,” and warned users that any USDT transaction in Russian wallets may now be compromised.
Kabaloev says that although stablecoins are still allowed in Russia under the experimental legal system, recent events have made it obvious to him that Russia needs its own alternatives.
He was quoted saying, “The recent blocking makes us consider creating tools internal similar to USDT and possibly pegged with other currencies.”
Use of crypto in international trade
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Russian legislators have sought to find ways to incorporate cryptography into the global economy as a way to circumvent Western sanctions. The Russian Parliament passed in its first reading two bills related to crypto, one of which would have allowed digital assets be used for international trade.
Since that time, many Russian companies have turned to digital currencies to maintain trade. According to previous reports, Russian oil firms have used Bitcoin, Ethereum and stablecoins such as USDT to facilitate payment with buyers from China and India.
Sources claimed that while these trades are still a tiny fraction of overall volumes, the amount of money involved is reportedly in the tens or hundreds of millions per month.
A report by VanEck, an investment company, claimed that Russia and China had begun using Bitcoin for certain energy transactions.
Crypto has already played a significant role in commerce, and Russian officials are now warming to the idea that a crypto reserve could be created, in a similar way to what the US government did recently.
Evgeny Mashaw, a member of the Civic Chamber, proposed in March to create a reserve fund managed by the state using digital assets that were confiscated during criminal proceedings. He believes this could improve Russia’s economic stability and decrease its dependence on reserves held abroad.
Launch of CBDC delayed
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In this context, Russia delayed its long-planned rollout of digital currency by the central bank. The digital ruble was originally planned to be widely adopted by the middle of 2024. However, it is expected that this will not happen before 2026.
Local media reported that the delays were due to technical issues, as many banks struggled to move away from U.S. software solutions, particularly Oracle.
The database systems used by Russian banks to process high volume transactions are crucial for ensuring security. However, the current sanctions have prevented them from fully supporting the rollout of digital ruble.
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