Trading US stocks through crypto derivatives: a lifeline or a minefield for Russians?
After the introduction of harsh sanctions restrictions in 2022, Russian investors' access to the US stock market through traditional brokerage accounts was virtually cut off. However, the most enterprising part of the market quickly found an alternative workaround — tokenized stocks and crypto derivatives on foreign platforms. This instrument allows earning income from changes in the value of US company shares, using cryptocurrency for settlements. But how safe and legal is this practice for Russian citizens? Let's figure it out.
Scale of the phenomenon: mass trend or narrow niche?
Experts' opinions on the prevalence of this method are divided. On one hand, Igor Plotnikov, Executive Director of Millpay, notes the high demand for tokenized stocks on platforms like Bybit, Binance, and Deribit among Russian traders. The current market situation — a downturn in the crypto market against the backdrop of a strong revival in the stock market — makes the instrument particularly relevant. He suggests relying on indirect data: lively discussions in specialized communities and high traffic on exchanges.
On the other hand, Alexander Nam, Vice President for Digital Assets at MTS Fintech, and Yaroslav Kabakov, Director of Strategy at IC Finam, assess the prevalence of the instrument much more cautiously, calling such trading the domain of a narrow circle of experienced players and an exclusively niche practice.
Key risks: sanctions, law, and infrastructure
Experts are unanimous in their assessment of potential threats. Yaroslav Kabakov points to increased legal, sanctions, and infrastructure risks. The investor is entirely dependent on the rules of a specific foreign platform and may face asset blocking at any moment, left without the usual protection of property rights.
Alexander Nam divides all concerns into three categories:
- Legal: complete uncertainty about the legal status of transactions and complex tax accounting.
- Sanctions: high probability of account blocking due to Russian citizenship.
- Infrastructure: a tokenized instrument never guarantees legal rights to ownership of the underlying asset.
Igor Plotnikov emphasizes the nature of the instrument itself: any tokenized stock is a derivative fully dependent on the exchange that issued it. If the platform runs into problems, the trader risks being left with nothing, as they have no rights to the actual securities. The legal status of transactions is in a gray area due to the lack of clear regulation.
Fyodor Ivanov, Director of AML/KYT Analytics at operator SHARD, suggests distinguishing risks depending on the type of platform. On centralized exchanges, difficulties are related to compliance, which has become too demanding for users with Russian passports. On decentralized platforms, he sees no particular risks beyond the standard loss of funds due to high volatility. The main problem, according to him, is that when withdrawing funds into the Russian regulated framework, the question of the legality of their origin remains open, and it will be difficult for the bank to understand these explanations.
Looking to the future: legal alternatives
Yaroslav Kabakov believes that Russian legislators will bet on licensed digital instruments within the national financial system. Operations through uncontrolled foreign crypto exchanges will not be supported. Alexander Nam specifies: investors will likely be offered digital financial assets (DFAs) on foreign securities, tokenized RWAs, and various structural solutions. In his opinion, their active development will eventually crowd out the gray segment of the market.
Igor Plotnikov views regulation from a different angle. For him, it is not about crowding out players, but about long-awaited clarification of the rules of the game. He explains that after the law on digital currency comes into force, citizens will be able to legally buy tokenized assets with cryptocurrency. Restrictions will only affect the use of Russian payment infrastructure. That is, buying USDT for rubles on a domestic licensed platform, transferring them abroad, and purchasing assets there is legal. But buying them on a foreign exchange directly with rubles will be prohibited, although technically this is already impossible since foreign platforms do not accept rubles.
My analysis: Trading US stocks through crypto derivatives is undoubtedly an effective but extremely risky instrument for Russian investors. The main danger lies not in market volatility, but in complete dependence on the will of foreign platforms and the absence of any legal protection. While this segment remains "gray," every investor must realize that they are essentially buying not an asset, but a platform's obligation, which can be canceled at any moment. Legalization and the emergence of domestic DFAs are the only path to safe and transparent trading of foreign securities.