Finance Ministry Says Sanctions Motivating Russia to Develop Crypto Market Infrastructure

Russia has been cut off from the global financial industry after the sanctions that were imposed against it by the Western nations. According to a top official of Russia’s Financial Ministry, this has resulted in motivating Moscow to develop a domestic infrastructure for promoting the growth of digital assets. This comes as Russian citizens appear to be losing their access to most international crypto platforms as well. The international sanctions against Russia have been expanding because of its decision to invade Ukraine and this has prompted the country to turn its attention towards cryptocurrencies.

There have been increasing worries that Russia may try to use cryptocurrencies for circumventing the sanctions that have been imposed against it. The crypto market has also been affected because of the penalties and it has become difficult for Russian citizens to cash their digital assets. Therefore, this has increased incentives for Russia to build their own infrastructure to oversee the crypto space, as Russian nationals are being restricted from accessing foreign exchanges due to sanctions. The head of the Financial Policy Department Ivan Chebeskovshared his sentiments while attending the conference for International Banking Day.

The high ranking official said that Russian citizens who had made investments in crypto abroad were finding it increasingly difficult to access their assets, make withdrawals and convert them. Now, foreign regulators have become increasingly worried about Russian citizenship, due to which they are blocking money and even going as far as blocking new accounts and denying them altogether. Chebeskov said that this is was providing motivation to Russia to create their own digital infrastructure. If a Russian crypto market would exist, it would provide Russians the chance to withdraw their assets and they would also be able to conduct other transactions.

The Finance Ministry said that a growing number of Russian citizens are willing to transfer their coins to the country. This is primarily because a number of leading trading platforms have already restricted access of Russian users, such as the crypto exchanges in South Korea. The crypto space in Russia is only partially regulated for now under the law titled ‘On Digital Financial Assets’ which had been put into effect in January, 2021. The future of crypto is still under discussion by the authorities in Moscow and a blanket ban on cryptocurrencies has been put forth by the Central Bank of Russia. However, most government organizations are in support of the proposal of Ministry of Finance to legalize the industry under government oversight.

A regulatory plan had been approved by the Federal government back in February, which had been based on the concept of the Finance Ministry. The department had also submitted a new bill later that month, which was titled ‘On Digital Currency’ and it introduced some comprehensive rules for the crypto sector. The Ministry of Finance is also coming up with rules that would address the area of crypto taxation as reported by the media. Likewise, the Central Bank of Russia is also working on its own central bank digital currency (CBDC).

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