In response to financial sanctions as soon as possible, Russia abandons the establishment of a national encrypted asset exchange

The digital ruble is still advancing, but the creation of a national-level encryption exchange needs to be abandoned, and regulators and legislatures are preparing to use rules to control the development of the encryption industry.

Written by: Mori Goro

Yesterday (May 29), Anatoly Aksakov, head of the Russian State Duma Committee on Financial Markets, announced that Russia is no longer moving ahead with plans to create a national cryptocurrency exchange. Instead, it will focus on creating rules that would allow private companies to set up such exchanges.

Russia will formulate regulatory regulations for cryptocurrency exchanges

Anatoly explained that since (crypto asset) exchanges will help businesses with cross-border settlements, restrictions may be imposed on them. At the same time, new cryptocurrency exchanges will appear. The view is backed by the Ministry of Finance, and in future the exchanges will be regulated by the Russian Central Bank, which is due to introduce new regulations by the end of the year.

Ivan Chebeskov, director of the Financial Policy Department of the Russian Ministry of Finance, also recently stated that the central bank believes that encrypted assets should be fully regulated. At present, the Central Bank of Russia has agreed to introduce mining into the legal field, and it is possible to use cryptocurrencies for international settlement and exchange business within the experimental legal system. Anatoly also expressed his opinions on cryptocurrencies last year, saying that encrypted assets will become legal currency in Russia in 2023, but currently encrypted assets are only used in Russia's foreign transactions.

Last June, Anatoly suggested that Russia’s national cryptocurrency exchange could be launched as part of Moscow Exchange, “a respectable organization with a long tradition.” In September, Moscow Exchange drafted a bill on behalf of the central bank to allow trading of digital financial assets.

In November 2022, Russian legislation announced that a draft amendment was being developed to allow the country to launch a national cryptocurrency exchange. Sergei Artukhov, member of the Duma Committee on Economic Policy, emphasized the fiscal rationality of such measures:

“It is pointless to deny the existence of cryptocurrencies, the problem is that they circulate freely outside state regulation. These are billions of rubles lost in taxes to the federal budget.”

Anatoly said that in the future, all crypto asset exchanges will be regulated by local regulations, as they can be used to bypass financial sanctions in the US and Europe.

Russia will continue to create new cryptocurrency platforms in response to sanctions

Russia's series of actions are all aimed at coping with Russia's current embarrassing situation.

In March 2022, the European Union announced plans to remove many Russian banks from the Society for International Interbank Telecommunications (SWIFT) messaging system, and the U.S. Office of Foreign Assets Control added several Russian entities and several Russian citizens to its sanctions list. The financial sanctions imposed by the United States and other countries on Russia have caused panic in Russia's economic, social, and financial development. For details, please refer to the analysis of ChainDD's previous article [ChainDD Exclusive] Financial nuclear bombs are starting to backfire: global energy rare metals are skyrocketing, encryption The market is chaotic.

In recent days, the U.S. Department of Justice’s national security and crime divisions are investigating the cryptocurrency exchange’s provision of services to Russians. Earlier this month, Binance was revealed to be under investigation by the U.S. Department of Justice (DOJ) national security division for allowing Russians to use the cryptocurrency exchange in violation of U.S. sanctions. No charges have been filed against the company or its executives in connection with the investigation. However, after sanctions were imposed on Russia in April 2022, Binance restricted its services to the country. For details, please download the latest app of ChainDD and view the previous article: **Binance is being investigated by the United States for allegedly violating the White House’s sanctions against Russia. **

Digital ruble is still advancing

Although Russia has taken the above-mentioned actions in the field of encrypted assets, this action will not affect the implementation process of the digital ruble. In 2020, Russia passed a major cryptocurrency law, the Law on Digital Financial Assets, officially banning payments in cryptocurrencies like Bitcoin (BTC). In the first half of 2022, Russian President Vladimir Putin opened the door to cryptocurrencies and said that Russia has sufficient technical personnel and abundant energy resources, making it the most ideal area for mining development.

Immediately afterwards, with the support of Putin, the digital ruble began to advance with great fanfare. At present, both the Ministry of Finance and the central bank have indicated that they will do their best institutionally and technically.

According to the central bank’s latest monetary policy update, the central bank will start connecting all banks and financial institutions with the digital ruble platform in 2024.

ChainDD has also made an in-depth interpretation of Russia's digital ruble promotion plan in previous articles, including Russia's cryptocurrency market share.

The release of the digital ruble in 2024 is imminent. In the past six months, there have been constant news in the field of encryption in Russia. Russia is seeking to build a transnational encryption platform. As an important measure to deal with financial sanctions, Russia must actively promote it.

In the middle of this month, Anatoly Aksakov, chairman of the Duma Financial Market Committee, said that the digital ruble bill project is already waiting to be discussed and approved, and it may be passed in June. The Russian central bank is currently awaiting the publication of the rule set in order to conduct a field test of the real user capabilities of the CBDC (central bank digital currency). Russia also plans to launch an offline version of the digital ruble by 2025, aiming to integrate non-bank financial intermediaries, financial platforms and transaction infrastructure.