Russian Government Shifts Focus to Private Crypto Exchanges, Ending Plans for State-Owned Platform

Russian Government Shifts Focus to Private Crypto Exchanges, Ending Plans for State-Owned Platform

After sending conflicting messages, the government appears to be increasingly open to collaborating with the cryptocurrency industry.

According to a report from a Russian news outlet, Russian lawmakers have decided to abandon their plans for creating a state-owned cryptocurrency exchange. Instead, they intend to establish rules and regulations for existing enterprises in the field. The news was initially shared by Colin Wu of Wu Blockchain on Twitter early Monday morning, linking to a translated article from a Russian news source. The country’s new focus is to allow private companies to develop crypto exchanges.

Ivan Chebeskov, the Director of the Financial Policy Department of the Ministry of Finance for the Russian Federation, stated in the news report, “The Ministry did not support the establishment of a single national crypto-exchange.” The intention now is to “legally regulate the possibility of creating such platforms by private businesses.”

Anatoly Aksakov, the head of the Russian lower house committee on financial markets, added that instead of creating a national crypto exchange, their plan is to establish rules governing the establishment and operation of such infrastructure.

Aksakov further mentioned that crypto exchanges will be permitted to facilitate cross-border payments, although he did not specify which ones, and acknowledged that they may face new restrictions.

The Russian news outlet Izvestia, which published the story, reported that the Central Bank will likely regulate the activities of these platforms and oversee international settlements within the country’s regulatory framework.

The news has been well received by several private cryptocurrency operators in Russia. Oleg Ogienko of BitRiver, a cryptocurrency mining operation based in Russia, told Izvestia, “This will help minimize the risks of sanctions, cyber attacks on infrastructure, and eliminate potential market monopolies.” Echoing this sentiment, Ivan Gostev, the commercial director for GIS Mining, stated that these developments would “encourage the emergence of more competitive and innovative companies.”

The positive reception from the private sector should not come as a surprise, considering that Russia ranks 137th out of 180 countries on the 2022 Global Corruption Index, highlighting the need for caution in their official endeavors.

Russian authorities have shown fluctuating attitudes towards the digital asset space over the years. In early 2022, the Bank of Russia proposed an outright ban on cryptocurrency payments, followed by the Ministry of Finance submitting a proposal for Bitcoin regulations a month later. Later, Vladimir Putin signed a law to prohibit payments in digital assets, only for the country to explore stablecoins as a means to bypass sanctions.

Today’s news comes at a time when Western-led financial sanctions against Russia persist following its invasion of Ukraine. Despite the history of mixed signals, this development potentially signifies a new chapter in the government’s relationship with cryptocurrencies.