Russia's crypto circuit is being built for cross-border settlements, but sanctions are gradually closing the exit abroad — this paradox calls into question the economic rationale of the entire structure. However, in my deep conviction, it is precisely the sanctions pressure that will become the catalyst forcing the market to seek more complex, yet more sustainable solutions.
Who the crypto circuit is being created for
Analysis shows that the new infrastructure addresses the needs of four key groups. For foreign trade settlements, it is a natural expansion of the EPR (Experimental Legal Regime) to a wide range of participants. Investment divisions will gain new digital products, including opportunities for Digital Financial Assets (DFA) and attracting international capital. Financial and credit institutions will be able to expand lending through factoring and debt securitization. The state, meanwhile, is bringing the de facto existing industry into a regulated, taxable framework, solving AML/CFT issues and meeting FATF requirements.
The key point: for each category — whether legal entities or individuals — tools that are currently in acute shortage will emerge. Major players are already capturing the market, and this is only possible with legislation in place. It doesn't matter what kind exactly — the main thing is that legal mechanisms exist.
Sanctions and circuit resilience
Circumventing sanctions is not the primary goal of the structure. Pressure is being applied, and will continue to be applied, under the 20th EU sanctions package, but market participants are aware of this and are already taking measures to mitigate risks. Fears that infrastructure elements will fall under secondary sanctions are exaggerated. The system will operate in the same way as fiat transactions.
I will highlight three key protection mechanisms. First, interaction with CIS-licensed solutions and intermediary links, which blurs the trail. Second, managing the issuance of stablecoins based on banks: it is technically impossible to track and block the entire issuance system as a whole, as it can be easily duplicated. Third, the use of alternatives: DFAs, investment products, and tokenization will serve as a backup option for the most severe scenarios.
Is there a point in a closed circuit
The value of cryptocurrency lies in its cross-border nature. If the circuit is completely closed within Russia, the economic rationale will be greatly diminished. However, complete isolation is impossible due to decentralization. One can try to restrict entry and exit into fiat, but not all countries support isolationist policies, and DeFi is so developed that it is technically impossible to erect all barriers without destroying the tools.
The economic rationale of the Russian circuit is to give the market the opportunity to bypass fiat restrictions using cryptocurrency and profit from it. This is not about isolation, but about creating an alternative channel for capital.
Who wins and who loses
Opinions diverge here. The black market will lose — it will not disappear, but the financial flow through unregulated organizations will gradually decline. Everyone else will only benefit in the long term. However, there is a harsher assessment: banks are already deploying their own infrastructure and know how to work with crypto instruments, so they are the winners. Small and medium-sized capital, as well as startups, lose out. For them, there are three paths: migration to other countries, selling to banks in the near future, or creating products that banks currently lack the time for but that are needed by the market and specific client banks.
Who are crypto depositories being built for
Crypto depositories and wallets are created for clients — this is a legal requirement. The use of cryptocurrency has long moved beyond a narrow circle of anonymous users: buying a car or real estate with crypto, transferring funds abroad require proof of legal origin. The function of depositories and regulated wallets is to assist users within the legal framework. Excesses are inevitable, but not so much from malicious intent as from incompetence: new products are complex on both technical and user levels.
Current independent alternatives are a temporary and mystical phenomenon. Regulation will change the market and give the "green light" only to institutional players with large client bases. This is about a new segment of users — existing traditional players, bank clients who will receive the same service at their preferred bank.
My expert opinion: The Russian crypto circuit is not an attempt to escape sanctions, but a strategic step to integrate digital assets into the traditional financial system. Sanctions will only accelerate this process, forcing market participants to become more inventive. Those who can adapt to the new rules of the game — large banks and institutional players — will come out on top. Small and medium-sized businesses not ready for consolidation risk being left behind.