Russian Finance Official Proposes Domestic Stablecoin Amid Sanctions Fallout

Russian Finance Official Proposes Domestic Stablecoin Amid Sanctions Fallout

In the wake of mounting pressure from international sanctions, a senior Russian finance ministry official has proposed that the country should move toward developing its own stablecoin, citing national financial security concerns.

Osman Kabaloev, the Deputy Director of the Financial Policy Department at Russia’s Ministry of Finance, said the Kremlin should explore building a Russia-backed stablecoin similar to Tether’s USDT, following the recent freezing of wallets tied to the sanctioned Russian crypto exchange Garantex.

“We do not impose restrictions on the use of stablecoins within the experimental legal regime,” Kabaloev told Russian state outlet TASS.

“Recent developments have shown that this instrument can pose risks for us. This leads us to consider the need to develop internal instruments akin to USDT, potentially pegged to other currencies.”

Garantex Crackdown Sparks Push for Sovereign Solutions

Kabaloev’s remarks came shortly after the U.S. Department of Justice, in coordination with authorities in Germany and Finland, took action on March 6 to freeze domains linked to Garantex. The exchange had been sanctioned by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) since April 2022 for alleged money laundering activities and reportedly processed over $96 billion in illicit funds since 2019.

As part of the crackdown, stablecoin issuer Tether froze $27 million worth of USDT held in Garantex-linked wallets. The freeze forced the exchange to halt all operations, including customer withdrawals — highlighting how centralized stablecoin issuers can enforce international sanctions at the protocol level.

Russian crypto exchange Garantex had to halt withdrawals after Tether Froze $27 million of its USDT. Source: US Department of Justice

Since then, Garantex has allegedly reemerged under a different name, continuing to operate and reportedly laundering ruble-backed stablecoins through a new platform, according to a Swiss blockchain analytics firm.

Russia’s Growing Crypto Ambitions

The proposal for a sovereign stablecoin is just one of several crypto-related initiatives gaining traction in Russia. On March 20, Evgeny Masharov, a member of the Russian Civic Chamber, proposed establishing a state crypto fund using confiscated assets from criminal cases.

Additionally, Russian lawmakers have been advancing legislation to recognize cryptocurrency as property under criminal procedure law, a move aimed at tightening the country’s legal framework for digital assets.

Stablecoin Usage Surging Globally

The proposal comes at a time when the stablecoin market is booming globally. Since mid-2023, stablecoin market capitalization has surged past $200 billion, with active wallets growing by over 50% in a year, according to a joint report from Artemis and Dune.

In 2024 alone, stablecoin transaction volume reached $27.6 trillion, outpacing Visa and Mastercard combined by 7.7%. This massive growth has been driven in part by the increasing use of bots and automation in DeFi and trading platforms.

A Strategic Move or a Geopolitical Gamble?

For Russia, developing a domestic stablecoin could be a way to regain transactional autonomy in the face of tightening Western sanctions and increasing global reliance on blockchain infrastructure.

However, such a move would place Russia at the center of a growing geopolitical debate over financial sovereignty, decentralized finance, and regulatory control in a rapidly evolving digital economy.

Whether the Kremlin moves forward with this plan remains to be seen, but the message is clear: in an increasingly tokenized world, control over currency infrastructure is now a matter of national strategy.