The Russian Finance Ministry is seriously considering creating a Rouble stablecoin following a USDT freeze on wallets linked to the local cryptocurrency exchange Garantex.
According to a report on Reuters citing Osman Kabaloev, deputy head of the Financial Policy Department at the Finance Ministry, the proposed Russian domestic stablecoin would be an internal tool similar to USDT and pegged to foreign currencies.
USDT Freeze Blocks Millions
The senior Ministry official’s comments on developing a Rouble stablecoin come hot on the heels of a USDT freeze targeting digital wallets on Russian crypto exchange Garantex that effectively denied users access to over $30.12 million. The restrictions follow a firm freeze linked to the protocol after the EU sanctioned the exchange.
The Russian cryptocurrency exchange disclosed on March 6 that it was forced to suspend operations and could no longer facilitate user redemption. Commenting on the development, Kabaloev said:
“The recent blockage makes us think we need to consider creating internal tools similar to USDT, possibly pegged to other currencies.”
Stablecoins Mitigated Western Sanctions
Whether the decision to consider creating a Russian domestic stablecoin is a strategic move or a reaction, it comes at a time when a report by crypto exchange Bitwise revealed that the transaction volume of stablecoins exceeded $14 trillion in 2024, surpassing Visa’s for the first time in a year.
Before the USDT freeze, businesses in Russia used the Tether stablecoin for international trade to beat barriers caused by sanctions that prevented them from accessing global financial systems.
Existing regulations in the country do not allow Russians to use cryptocurrencies locally, especially when making retail payments. Nonetheless, the absence of a strict regulatory framework has enabled companies to experiment with crypto-based payment systems for their international transactions to mitigate the effects of Western sanctions. The finance ministry’s consideration of a Rouble stablecoin would be a continuation of an exploration for related alternatives.
No Specific Timeline Given
Kabaloev’s remarks could signal a strategic shift in the plan to develop sovereign or semi-sovereign tools for cross-border value transfer.
While the Finance Ministry did not disclose further details regarding a specific design or implementation timelines for the proposed creation of a Russian domestic stablecoin, it could be pegged to the US dollar or any other popular foreign currency.
Conclusion
The popularity of USDT among Russian businesspeople for their international transactions highlights the niche stablecoins have cut into the global financial system.
The call for the creation of a Rouble stablecoin reflects a growing interest in the country in reducing its reliance on digital assets owned and controlled by foreigners. While Tether maintains that it complies with international regulatory requirements, including sanctions enforcement, it has continued to encounter such wallet freezes in other regions.
Frequently Asked Questions (FAQs)
How do stablecoins work?
Stablecoins are “pegged” to a fiat currency like the US dollar, which gives them a 1-to-1 value with the pegged currency. Whereas Bitcoin prices change almost constantly, a dollar-pegged stablecoin is always worth a dollar or within a few cents of a dollar.
Is USDT a stablecoin?
USDT is one of the most widely adopted stablecoins. It is a blockchain-based currency tied to the US dollar. Tether says USDT’s mission is to offer a safer digital asset that isn’t affected by market volatility like Bitcoin.
How many types of stablecoin exist?
At least four primary stablecoin types can be identified by their underlying collateral structure. These include fiat-backed, crypto-backed, commodity-backed, and algorithmic stablecoins.
Appendix: Glossary to Key Terms
Stablecoin: A type of cryptocurrency whose value is pegged to another asset, such as a fiat currency or gold, to maintain a stable price.
Dollar-peg: Linking the market value of a cryptocurrency to an external reference, which can be a fiat currency or a commodity?
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