Russian Ministry of Finance has cautioned citizens against using cryptocurrencies as savings. With the decline in interest for foreign fiat currencies due to imposed restrictions and Western sanctions, the official emphasized that high-risk assets like cryptocurrencies are unsuitable for most people’s savings and should primarily be considered by wealthier individuals.
During the blockchain conference “Finance of the Future: Challenges and Opportunities,” Ivan Chebeskov, the head of the Financial Policy Department of the Russian Ministry of Finance, highlighted the risks associated with cryptocurrencies. He stated that even stablecoins pegged to traditional currencies are not ideal for savings as they do not generate interest. Chebeskov advocated for regulated digital financial assets (DFAs) issued on blockchain platforms operated by licensed entities under Russian law, which he believes could be a better alternative. The Bank of Russia also expects significant growth in the DFA market.
Chebeskov further expressed that assets like cryptocurrencies are more suited for wealthier Russians, not those with average income and savings. He suggested that such investments should only represent a portion, around 10 to 15%, of available capital for investment. According to Anatoly Popov, deputy chairman of the Board of Sberbank, approximately 13 million people in Russia, roughly 9% of the population, currently hold cryptocurrencies, with at least 1 million active users.
Russian Government shifts focus away from national cryptocurrency exchange
The Russian government has abandoned its plans to establish a national cryptocurrency exchange. It will instead focus on creating a regulatory infrastructure to monitor the development and operations of crypto trading platforms within the country. This shift aims to minimize the risk of further sanctions while promoting competition in the crypto market.
Ivan Chebeskov, Director of the Financial Policy Department at the Ministry of Finance, revealed that the Ministry never truly supported the idea of a national crypto exchange. The responsibility of regulating Russia’s crypto trading platforms will likely fall under the purview of the Central Bank of the Russian Federation, in line with the new plan the Ministry of Finance agreed upon.
In April 2023, the Russian parliament introduced a draft law considering using digital assets for cross-border payments to overcome sanctions. The law specifically focuses on the country’s inability to use euros and dollars for payments, resulting in many transactions being settled in foreign currencies despite the contracts being denominated in euros and dollars. To mitigate the associated foreign exchange risk, Russia is exploring asset swapping and tokenizing precious metals and other assets for settlement purposes.
The draft law proposes allowing exporters to use digital financial assets (DFA) and cryptocurrencies exclusively for cross-border payments. The Bank of Russia acknowledged the inevitability of cross-border cryptocurrency payments in the current geopolitical conditions in September 2022. The finance ministry and the central bank expect to legitimize such payments in the future.
Furthermore, Russia revealed its plans for the digital rouble platform, indicating support for interactions with other central bank digital currencies (CBDCs). The development of the digital rouble includes various mechanisms to facilitate communication with other state-issued digital currencies. Russian lawmakers have been informed by officials from the Central Bank of Russia that specific models for CBDC interaction are still being determined, with multiple alternatives under consideration.
As the Russian government continues to navigate the evolving landscape of cryptocurrencies and digital assets, the country seeks to strike a balance between regulatory oversight, cross-border payment solutions, and the exploration of its own digital currency.
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