Competition will bring down banking spreads on cryptocurrency in Russia: market forecast
The Russian banking sector stands on the threshold of a new era—the start of legal cryptocurrency operations. However, the first steps in this market will be marked by high spreads, which will only begin to decline over time under the pressure of market competition. My analysis shows that a sustained markup of 5–7% or higher on a competitive playing field is a temporary phenomenon that will quickly fade away.
Why initial spreads will be inflated
At the initial stage, banks will have to factor in significant costs: the price of liquidity, compliance procedures, risk hedging, and the creation of new infrastructure. In certain products, the markup could reach several basis points. This is an inevitable price for entering uncharted territory, where regulatory requirements and operational complexities remain high for now.
However, I do not see such spreads as sustainable in the long term. As soon as several major players and other regulated participants enter the market, margins will begin to compress at a striking pace. The market, not the regulator, will determine the final price for the client.
The price formula: liquidity, hedge, and infrastructure
The final spread is not a bank's whim but a complex structure. It is composed of the global price of the crypto asset, the cost of liquidity, hedging expenses, infrastructure costs, and the specific bank's margin. Meanwhile, the Bank of Russia is expected to focus on regulating access rules and the composition of participants, rather than setting fixed quotes. This means that markups may vary significantly across different banks.
Within an individual credit institution, the spread will depend on the number of active product users, the volume of real client liquidity, and the bank's own cost of liquidity. Secondary factors, such as the legal structure and infrastructure, play a smaller role, but they cannot be completely ignored.
Who will win the battle for the client
Victory will go to those with a larger marketing budget and a greater willingness to take risks to dominate the new economy. This is not only about qualified investors. The mass-market client today is not ready to overpay simply for the word "bank." The level of stress among the retail audience since 2022 is so high that users are willing to accept many scenarios, except one—an unjustifiably high cost of service.
The picture is different for affluent clients. Large capital continues to migrate between countries, and with an average transaction size of 3–5 million rubles, a person is willing to pay for speed, transparency, and a hassle-free experience. The question of whether such a client will prefer their own accountant or a Russian bank is rhetorical. The winner will be the one offering the best service, not the one trying to profit from a lack of alternatives.
My verdict: Russia's banking crypto market is heading for a rapid cooling of spreads. The first players will try to extract excess profits, but within a few quarters, competition will force them to lower markups to levels close to the market norm. The key success factor is not the size of the fee, but the ability to build trust and a technological advantage.