Russia's finance ministry official urges country to launch its own stablecoins after USDT wallet block

Key Takeaways

• Russia is considering developing its own stablecoins after USDT digital wallets were blocked.
• The blockage of $30 million worth of USDT has intensified discussions on creating Russian stablecoins.

Osman Kabaloev, deputy director at the Ministry of Finance’s financial policy department of Russia, has urged the nation to create its own stablecoins, according to a Wednesday report from Reuters.

Kabaloev’s statement comes after Russia-linked digital wallets holding USDT were blocked last month. The blockage has prompted the Finance Ministry official to consider stablecoin options that function like USDT but may be pegged to currencies other than the US dollar.

In February, the European Union (EU) sanctioned Garantex, one of the largest crypto exchanges in Russia. The EU cited the exchange’s close ties to sanctioned Russian banks like Sberbank, T-Bank, and Alfa-Bank, and its role in helping them to evade EU sanctions.

Following the EU’s move, Tether blocked the digital wallets on Garantex, which held over 2.5 billion rubles (about $30 million), forcing the exchange to suspend operations temporarily, including crypto withdrawals. USDT was widely used by Russian firms as a payment tool before sanctions.

The exchange had its infrastructure seized by US and European law enforcement agencies shortly thereafter.

The US Department of Justice unsealed indictments against key operators for facilitating money laundering and cybercrime, estimating that Garantex processed at least $96 billion in illicit transactions.

Russian regulators have permitted experimental use of crypto assets in international payments, which has become more challenging due to Western sanctions.

Bank of Russia Governor Elvira Nabiullina, who opposes using crypto assets for domestic payments, said Russian firms are actively testing international crypto payments as part of the experiment.

In March, Russia reportedly used crypto, including Bitcoin and USDT, to conduct oil trades with China and India.

The nation has been exploring many strategies to mitigate the impact of Western sanctions, including considering the use of stablecoins and advancing the development of a digital ruble. These efforts, however, have yielded limited success.