Crypto news

Russia's crypto framework is being built for cross-border settlements, but sanctions are gradually closing off access abroad — this paradox calls into question the economic rationale of the entire structure. However, as recent analytical discussions show, this project has a deep internal logic, and sanctions will not kill it.

Who is the crypto framework being built for?

The crypto framework is not a single product, but a multi-layered ecosystem aimed at different categories of participants. For foreign trade settlements, it serves as a natural extension of the experimental legal regime (ELR) to a wide range of participants, granting them additional powers. Investment divisions gain an expanded range of digital products, including opportunities for digital financial assets (DFAs), attracting international investors, and creating secondary turnover in public networks. Financial and credit institutions get the opportunity to expand lending in the broadest sense: long-term, short-term, as well as instruments like factoring and debt securitization. For the state, represented by the Central Bank, the Ministry of Finance, and the Federal Tax Service, it means bringing the de facto existing industry into a regulated, taxable framework and eliminating issues related to AML/CFT and FATF compliance.

According to expert estimates, the share of cross-border transfers and settlements involving crypto is growing by 20-30% annually. The only problem that regulation in Russia solves is providing access to crypto market instruments for large banks and the regulator. Major players are capturing the market, and this is only possible under existing legislation — any kind, as long as legal mechanisms are in place.

Sanctions and the resilience of the framework

Circumventing sanctions is not the primary goal of the framework. Pressure will be applied — and is already being applied under the 20th EU sanctions package — but market participants are aware of this and are already taking measures to reduce risks. Fears that infrastructure elements will fall under secondary sanctions are not shared. The system will operate smoothly, just as fiat transactions do. Three key measures are highlighted to reduce sanctions risk: interaction with CIS-licensed solutions and other intermediate links in the payment chain (this helps obscure the trail and reduce exposure); managing the issuance of stablecoins based on banks (solves the problem of marking smart contracts and wallets, as it is technically impossible to track and block the entire issuance system at once — it can be easily and inexpensively duplicated, launched from scratch, and scaled in Russia); using alternative solutions, including DFAs, investment products, and tokenization — this is a backup option for the most challenging scenarios.

Does a closed-loop framework make sense?

The value of cryptocurrency lies in its cross-border nature. If the framework were entirely closed within Russia, the economic rationale would be greatly diminished; however, such a situation is impossible precisely due to the decentralized nature of digital currencies. One could try to restrict entry and exit into fiat outside Russia, but this would not completely close the framework — 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 relevant instruments. The economic rationale of the Russian framework lies precisely in giving the market the opportunity to bypass fiat restrictions using cryptocurrency — and to profit from it.

Who wins and who loses?

Here, expert opinions diverge. Only the black market will lose out — it will not disappear entirely, but the financial flow through completely unregulated organizations will gradually decline. Everyone else, in the long term, will only benefit. A harsher assessment: Russian banks are already deploying their own infrastructure and know how to work with crypto instruments, so they come out ahead. Small and medium capital, as well as startups, lose out. For them, there are currently three paths: migration to other countries; selling to banks in the near future; creating products that banks currently lack time for but that are needed by the market and specific client banks.

Who are crypto depositories being built for?

The creation of crypto depositories and crypto wallets is a legal requirement. The use of cryptocurrencies has long moved beyond a narrow circle of anonymous users: buying a car or real estate with crypto, transferring funds abroad require proof of the legal origin of funds and readiness to answer questions about taxes. This is precisely the function of depositories and regulated wallets — assisting users within the legal framework. Excesses on the part of market participants and the state are inevitable, not so much due to malicious intent as to incompetence: new products are complex at both the technical and user levels, and years of skill improvement for all participants will be required. Current independent alternatives are a mystical and temporary concept. Regulation will change the market and give the "green light" only to institutional players with large client bases. This refers to a new segment of users of crypto depositories and crypto wallets — existing traditional players, bank clients, individuals, and legal entities who will receive the same service at their preferred bank.

My analysis: The Russian crypto framework is not an attempt to evade sanctions, but an inevitable stage in the evolution of the financial system, where blockchain becomes a new layer of settlements. Sanctions only accelerate this process, forcing market participants to seek more efficient and secure instruments. The key question is whether the regulator can find a balance between control and innovation without stifling the very idea of decentralization. For now, the bet is on institutional players, which will likely lead to market consolidation and the exit of small players. But for cross-border settlements, this is undoubtedly a positive signal.