- Russia is accelerating its efforts to create a new homegrown stablecoin right after the European Union decided to freeze wallets tied to Garantex.
- Garantex was accused of processing over $96 billion in illegal funds since its inception in 2019.
- Osman Kabaloev, deputy director of the Financial Policy Department at Russia’s Finance Ministry, noted that USDT poses risks for Russia, and a stablecoin is important.
The recent macroeconomic issues that have shaken the world’s financial systems in recent months have seen some major changes start to take place. Russia is accelerating its efforts to create a new homegrown stablecoin, right after the European Union decided to freeze wallets tied to Garantex.
Russian officials, along with other European and Asian countries, are now calling for new payment tools that are immune to the foreign interference that often comes from Western-controlled digital assets like USDT. Here are some major details.
Why the Garantex Incident Sparked a Policy Shift
So what happened with Garantex, and why is this leading to stablecoin calls in Russia? 6th March saw U.S., German, and Finnish authorities shut down several domains connected to Russia-based crypto exchange Garantex.
Garantex was accused of processing over $96 billion in illegal funds since its inception in 2019. That same day, Tether froze around $30 million worth of USDT in wallets associated with the platform, which more than crippled Garantex.
Even though the exchange has tried to resurface under a new name and using ruble-backed stablecoins to move funds, the message from the US, Germany, and Finland has been clear. Dependence on foreign digital currencies can be very problematic, especially when it comes to geopolitics.
A Call for an Internal Stablecoin
In response to these issues, the deputy director of the Financial Policy Department at Russia’s Finance Ministry, Osman Kabaloev, called for the country to develop a stablecoin that Russia controls. In an interview with the state news outlet TASS, Kabaloev noted that the recent developments have shown that “this instrument (USDT) can pose risks for us”.He added that a Russian Ruble-backed stablecoin could reduce the exposure to international sanctions and avoid issues similar to the Garantex incident.
The proposal comes amid an even wider government initiative to create a better infrastructure that can function without oversight from Western intermediaries. This is especially important, considering how Russia continues to face more and more sanctions over its geopolitical activities.
Stablecoin Usage is Soaring Globally
Interestingly, Russia’s stablecoin ambitions come amid a boom in calls for stablecoin adoption from all over the world. A recent report from Artemis and Dune shows that the number of active stablecoin wallets has soared by more than 50% on a YoY basis.
The market cap for the stablecoin market has also gone as high as $27.6 trillion, which is higher than that of MasterCard and Visa by nearly 8%. Russia itself has seen stablecoins become more popular among businesses looking for a way to bypass international restrictions. Until the freeze, USDT remained one of the most popular tools for such transactions.
While Russia continues to work on its own CBDC, known as the digital ruble, its progress has stalled due to technical and strategic concerns. The central bank hoped for a rollout sometime this year, but major institutions like Sberbank have shown skepticism over the currency’s lack of smart contract functionality. Overall, if the stablecoin bill is successful, it could help Russian businesses to transact more securely, while boosting international trade and protecting the economy more incidents like the Garantex wallet freeze.
