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The Russian crypto circuit is being built as infrastructure for cross-border settlements and the legalization of digital assets. However, sanctions pressure, including the 20th EU sanctions package, is gradually narrowing opportunities to access international markets. A paradox emerges: if the circuit becomes completely isolated within Russia, its economic value could be called into question.

Who is the crypto circuit being created for

From an analytical perspective, the circuit is aimed at several key groups. For foreign trade operations, it is a natural expansion of the experimental legal regime (ELR) to a wide range of participants, granting them additional powers. For investment divisions, it expands the range of digital products (including opportunities for digital financial assets (DFAs)), attracts international investors, and creates secondary turnover in public networks. For financial and credit institutions, it expands lending in the broadest sense: long-term, short-term, as well as digital instruments like factoring and debt securitization. For the state (represented by the Central Bank, Ministry of Finance, Federal Tax Service, and others), it brings the de facto existing industry into a regulated, taxable circuit and resolves issues related to AML/CFT and FATF compliance.

Sanctions and resilience: three lines of defense

Circumventing sanctions is not the primary goal of the circuit. Market participants are aware of the risks and are already taking measures to mitigate them. Infrastructure elements are unlikely to fall under secondary sanctions—the system will operate like fiat transactions. Three key mechanisms for reducing sanctions risk stand out:

• Interaction with licensed solutions from CIS countries and other intermediate links in the payment chain. This helps blur the trail and reduce the burden on direct channels.
• Management of stablecoin issuance based on banks. It is technically impossible to track and block the entire issuance system at once: it can be easily duplicated, restarted from scratch, and scaled in Russia.
• Use of alternative solutions, including DFAs, investment products, and tokenization. This is a fallback option for the most challenging scenarios.

Closed circuit: does it make sense?

The value of cryptocurrency lies in its cross-border nature. If the circuit is completely closed within Russia, its economic rationale will be greatly diminished. However, such a situation is impossible due to the decentralization of digital currencies. One could try to restrict entry and exit into fiat outside of Russia, but this would not completely close the circuit: not all countries support the policy of isolating Russia, and the DeFi sector is so developed that it is technically impossible to erect all barriers without destroying the corresponding tools.

Who wins and who loses

In the long term, only the black market will lose—the financial flow through completely unregulated organizations will gradually decline. All other participants will only benefit. However, the outlook is harsher: large Russian banks are already deploying their own infrastructure and know how to work with crypto instruments, so they come out ahead. 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 time for but that are needed by the market and specific client banks.

Expert summary from Cryptalist

The Russian crypto circuit is not an attempt to hide from sanctions, but a tool for institutionalizing the market. Regulation will only give the "green light" to institutional players with large client bases. Small and medium-sized businesses, as well as independent startups, will lose out if they do not find their niche in products that banks have not yet had time to master. Instead of mystical alternatives, we see a pragmatic approach: banks are taking over the market, and regulation is only accelerating this process.