Russia Proposes National Stablecoin Strategy After $30M USDT Freeze Hits Garantex

• Russian Finance Ministry signals pivot to sovereign crypto tools as Western sanctions disrupt access to key stablecoin platforms.
• Tether complies with EU sanctions, sparking national security concerns in Moscow

Russia’s Ministry of Finance is considering the launch of its own state-backed stablecoins in response to recent sanctions that have blocked access to the USDT stablecoin, widely used by Russian crypto exchanges. The move comes after Tether, the issuer of USDT, froze wallets linked to the sanctioned Russian exchange Garantex, affecting over $30 million in funds.

Also Read: Garantex Returns as Grinex—Will Regulators Let It Slide?

The incident, which followed sanctions imposed by the European Union in March, has intensified Moscow’s efforts to reduce its reliance on Western-controlled digital financial infrastructure. Garantex, one of the largest Russia-facing crypto trading platforms, confirmed that the frozen wallets led to a halt in operations and a search for alternatives.

Osman Kabaloev, deputy director of the Financial Policy Department at the Russian Ministry of Finance, publicly stated that Russia should “create internal tools similar to USDT” to protect its financial sovereignty. Kabaloev also hinted that these stablecoins could be pegged to currencies such as the ruble, Chinese yuan, or euro, potentially creating a diversified basket of stable digital assets to facilitate cross-border transactions.

“We must develop our own instruments to avoid dependence on foreign infrastructure,” Kabaloev said in remarks reported by Russian media outlet RBC.

USDT has become a core tool for facilitating dollar-denominated transfers on crypto platforms, especially in regions with restricted banking access. In Russia’s case, USDT was widely used by companies and individuals to bypass conventional payment barriers resulting from international sanctions following the Ukraine conflict.

Tether Compliance Highlights Vulnerability of Russian Crypto Users

Tether, although not a U.S.-based company, has increasingly cooperated with Western regulators and law enforcement, particularly in cases involving sanctioned entities, money laundering, or terrorist financing. Following the EU’s latest round of sanctions, Tether froze 29 wallets connected to Garantex, a move that aligned it with the European Commission’s directive.

Garantex was previously sanctioned by the U.S. Department of the Treasury in 2022 for allegedly facilitating transactions tied to darknet markets and ransomware groups. The platform continued operating under Russian jurisdiction, but its reliance on USDT exposed it to geopolitical pressure.

This incident has sparked renewed concern among Russian officials over the centralization of stablecoin issuance. With the vast majority of global stablecoin volume flowing through USDT and USDC—both controlled by firms operating under Western legal frameworks—Moscow sees increasing risk in the status quo.

A Parallel Track: Stablecoins vs. the Digital Ruble

While Russia’s central bank has taken a cautious stance toward cryptocurrencies, it has been actively testing its own central bank digital currency (CBDC), the digital ruble. Governor Elvira Nabiullina of the Bank of Russia has reiterated her opposition to the use of crypto for domestic payments, but she acknowledged that Russian companies are “experimenting with international crypto transactions.”

The Finance Ministry’s stablecoin push could run parallel to the digital ruble, offering more flexibility in international trade—particularly with countries that are also seeking to de-dollarize their economies. The ministry has suggested that privately issued or consortium-backed stablecoins could play a complementary role to the CBDCs.

In an April 2024 statement, Nabiullina emphasized: “We allow the use of cryptocurrencies in international settlements as an experiment, but not for internal payments. The digital ruble remains the foundation of our digital finance system.”

Geopolitics Fuel Race for Financial Independence

Russia’s drive to develop its own stablecoin infrastructure is part of a broader trend of financial decoupling. As traditional channels like SWIFT become inaccessible due to sanctions, crypto assets—especially stablecoins—have become essential for cross-border trade and remittances.

China, for instance, has already rolled out the digital yuan in several international pilot programs and is promoting it in trade agreements with Russia and other BRICS nations. Iran, Venezuela, and Turkey have also explored crypto-based alternatives to bypass U.S. financial control.

According to a 2023 Chainalysis report, Russia was ranked among the top 10 countries globally in crypto transaction volume, with a significant portion tied to stablecoin usage in peer-to-peer and business-to-business settlements.

Western policymakers are aware of the trend. In 2023, U.S. Treasury officials flagged stablecoins as a potential sanction evasion tool and called for stricter oversight. The European Union followed suit by integrating crypto wallets into its sanctions enforcement toolkit under the updated Markets in Crypto-Assets (MiCA) regulations.

Challenges Ahead for Russian Stablecoins

While Russia’s push for developing its own stablecoins represents a strategic move to bypass Western financial restrictions, the road ahead is lined with serious technical, regulatory, and geopolitical challenges.

One of the most pressing issues is the lack of an established legal framework governing privately issued digital assets. Stablecoins, especially those not backed or issued by the state, would require clear definitions under Russian law to gain legitimacy and attract institutional users. As it stands, Russia’s rules around cryptocurrency are still unclear and inconsistent. The Central Bank and the Ministry of Finance have different views on how crypto should be handled. Because of this, there is no clear policy to guide the creation of stablecoins. This lack of agreement makes it hard for new stablecoin projects—whether from private companies or the government—to move forward with confidence.

In addition to regulatory hurdles, trust and usability remain critical barriers. For a stablecoin to be viable, users must have confidence in its backing, transparency, and long-term stability. This trust is usually established through audited reserves, real-time redemption mechanisms, and consistent regulatory compliance—all of which require high levels of operational discipline and integration with both domestic and international financial systems.

Banking integration is another challenge. A successful stablecoin would need to interact seamlessly with the banking sector to allow fiat on- and off-ramps. However, many Russian banks are either hesitant to support crypto-linked products or face international constraints that prevent such activity altogether. Without reliable banking partnerships, stablecoin issuance could remain isolated from mainstream commerce and international trade flows.

International acceptance is perhaps the most difficult hurdle to overcome. For a stablecoin to serve its intended purpose—particularly as a tool for cross-border payments or sanctions evasion—it must be accepted and trusted outside of Russia. This would require cooperation with foreign crypto exchanges, cross-border payment platforms, and possibly central banks or foreign financial institutions. Given Russia’s partial exclusion from global financial infrastructure, particularly the SWIFT system, and the hesitancy of international platforms to engage with sanctioned entities, building that external support may prove difficult.

Despite challenges, some Russian fintech firms and state-backed institutions are quietly testing blockchain-based tools, like trade finance platforms, that could use stablecoins tied to non-Western currencies such as the Chinese yuan. The aim is to support trade with friendly nations while avoiding traditional payment systems.

No official timeline or responsible parties have been named, but experts say pilot projects may begin soon. These would likely be small-scale and carefully tested. If sanctions increase or Tether blocks more wallets, the push for a domestic stablecoin could speed up. Still, without legal clarity and global support, any Russian stablecoin may stay limited in use.