Stablecoins like Tether threatened by tougher rules for Russia’s $10 billion digital assets market

Upcoming stricter regulations for foreign digital assets in Russia may affect some cryptocurrencies, particularly stablecoins like Tether. Issuers should not be able to freeze holdings, according to one of the new rules announced by the country’s central bank.

The monetary authority is expanding requirements that digital assets issued abroad must meet in order to be admitted to the Russian market. The latter has already reached $10 billion in market capitalization, according to the latest estimates.

Bank of Russia prepares stringent regulations for foreign digital assets

The Central of Bank of Russia (CBR) has adopted additional requirements for digital assets entering the Russian market. The new rules concern the so-called “foreign digital rights” (FDRs) which can be bought and sold in Russia since August 2024, provided they are compliant with Russian legislation and similar to Russian digital financial assets (DFAs).

Under Russia’s law “On Digital Financial Assets,” DFAs are tokenized versions of real assets that are issued using blockchain technology while cryptocurrencies fall under a different category – “digital currency.” DFAs also refers to “digital rights” or digital representations of monetary claims and investor rights, for example.

Since the first DFA issue in 2022, the funds raised through DFAs have reached a total of 800 billion rubles (more than $9.9 billion) by the end of Q1 of 2025, Deputy Director of Bank of Russia’s Financial Market Infrastructure Department Kristina Aleshina announced at a forum in Saint Petersburg.

According to the new rules, which enter into force next Monday, May 26, FDRs must not be linked to securities issued in what Russia labels as “unfriendly countries.” Also, the instruments should not certify rights to receive cryptocurrencies that are prohibited in Russia. The regulator further emphasizes:

“The terms of issue must not contain any indication of possible blocking (of assets) by either the issuers themselves or payment agents and the persons controlling them.”

Russia’s central bank seeks to limit investor access to FDRs

Russian analysts say the latter condition can be used to target Tether (USDT). The FDR definition is broad enough to cover cryptocurrencies not falling under the “digital currency” category as well as some stablecoins, Georgy Gukasyan, director of the tax and legal department at DRT, Deloitte’s former branch in Russia, told the business news portal RBC.

According to Mikhail Uspensky, member of Russia’s expert council on the regulation of cryptocurrencies, the popular U.S. dollar-pegged stablecoin doesn’t meet the new criteria and will not be allowed to circulate in Russia. He noted, however, that doesn’t mean stablecoins won’t be used in foreign trade.

The Bank of Russia has been trying to limit access to cryptocurrencies to only “ highly qualified ” investors and wants to do the same with FDRs. But as crypto ownership and peer-to-peer transactions are not yet banned, the regulator lacks the tools to exert full control, explained Ignat Likhunov, founder of the Cartesius law firm which specializes in providing legal advice in the crypto space.

Russians may turn to decentralized stablecoins, expert says

Despite the formal restrictions, USDT remains a key instrument for 80% of cross-border transactions in Russia, Likhunov told the crypto news outlet Forklog. The CBR cannot completely stop its use and if it increases the pressure, users will switch to decentralized stablecoins like DAI, he predicted.

Tether is the largest stablecoin with a market capitalization exceeding $151 billion. To redeem their USDT for U.S. dollars, users need to pass customer verification in accordance with the issuer’s rules that comply with sanctions imposed on Russia by “unfriendly” nations, Gukasyan highlighted.

This means that Tether Limited may refuse to redeem the tokens of any person who has not passed verification, the lawyer elaborated. What’s more, the issuer of USDT is able to freeze the stablecoins in any user’s wallet at its sole discretion and at any time, he noted.

In March, Tether blocked 2.5 billion rubles’ worth of assets in wallets on the sanctioned Russian crypto exchange Garantex which has been accused by U.S. authorities of money laundering, assisting criminal organizations and violating sanctions. The move prompted the finance ministry in Moscow to consider issuing a stablecoin similar to Tether but pegged to a different fiat currency.

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