Russia to Launch Two Crypto Exchanges and a BRICS Stablecoin

Russia is advancing its cryptocurrency ambitions with plans to launch two new crypto exchanges—one in Moscow and another in St. Petersburg. These exchanges aim to enhance foreign economic activity (FEA) and support the creation of a BRICS-linked stablecoin.

Crypto Exchange Initiative

The Moscow-based exchange is anticipated to either utilise the existing Moscow Exchange infrastructure or function under an experimental legal framework. The St. Petersburg exchange may integrate with the St. Petersburg Currency Exchange (SPCE), aiming to facilitate international transactions.

Focus on Stablecoins

Both exchanges will primarily focus on stablecoins, digital assets typically pegged to a reserve of assets such as a national currency. Russia is exploring stablecoins tied to the Chinese Renminbi (RMB) and a broader BRICS currency basket, which includes Brazil, Russia, India, China, and South Africa. This move aligns with BRICS’ push towards dedollarisation through crypto and blockchain technology.

Read more: Vladimir Putin Legalises Bitcoin Mining: A Bold Move for Russia's Crypto Sector

Regulatory and Technological Challenges

Currently, Russia operates under Federal Law No. 259 "On Digital Financial Assets," which governs digital assets but does not explicitly address cryptocurrency exchanges. The Experimental Legal Regime (EPR) might serve as the legal basis for these new exchanges, though a unified legal framework is still lacking.

Experts highlight several challenges:

• Technological Integration: Oleg Ogienko from BitRiver points out the difficulties in integrating stablecoins into existing blockchain systems, impacting their convertibility, liquidity, and security.
• Regulatory Uncertainty: Yaroslav Schitzle from Rustam Kurmaev and Partners notes the absence of clear legal mechanisms for exchange creation, with current regulations being inadequate.
• Sanctions Risks: Mikhail Uspensky warns that the transparency of blockchain technology could expose transactions to international sanctions scrutiny, potentially impacting participants negatively.

Market Implications

Initial access to these exchanges will be limited to major exporters and importers, with broader access potentially restricted in the early stages. Nikita Vassev of TerraCrypto suggests that unless alternatives are unavailable, most users may prefer established international platforms over new domestic exchanges.

Read more: 159 countries responded to join! Russia and BRICS suddenly announced a "new payment system"

Global Context

Meanwhile, India is also progressing with its crypto regulatory efforts, with the Digital Assets Regulation (DEA) release expected in September-October to lay the groundwork for digital asset regulation.