Russia plans to launch two BRICS exchanges and stablecoin

Just days after passing several laws on cryptocurrencies, Russia has decided to make bolder plans. According to local reports, the country is planning to launch two major cryptocurrency exchanges, one in Moscow and the other in St. Petersburg.

In addition, it aims to build a stablecoin linked to the BRICS – more specifically, pegged to the Chinese yuan. With this, the country aims to expand its relations with China and further reduce its dependence on the dollar.

In the case of exchanges, Russia’s goal is to have national platforms and reduce dependence on foreign services. However, experts have expressed concerns about the potential limitations and risks associated with the project, which could suffer from restrictions imposed by other countries.

Russia outlines ambitious plan

One of the two exchanges aims to leverage the infrastructure of the St. Petersburg Currency Exchange (SPCE) and thus facilitate foreign economic activity. Meanwhile, the other platform is expected to be based in the country’s capital, Moscow.

However, it is not yet clear whether it will be developed based on the Moscow Exchange’s technology or as a separate entity within an experimental legal framework.

What is known is that the main focus of these exchanges will be the creation and use of stablecoins. And this is where Russia’s partnership with China in issuing the yuan-backed stablecoin comes in. According to the Kommersant portal, the goal of the new currency is to strengthen economic cooperation between the nations that are part of BRICS (Brazil, Russia, India, China and South Africa).

BRICS countries are currently eyeing de-dollarization via cryptocurrency and blockchain. But Oleg Ogienko, CEO of BitRiver, highlighted the technological difficulties in integrating stablecoins into Russia’s blockchain infrastructure.

“Stablecoins, due to their legal nature, are more like cryptocurrencies. This may complicate their convertibility, liquidity, and security. In addition, the complexity of these issues may hinder the seamless adoption of stablecoins in Russia,” he explained.

Structures and challenges

In terms of regulatory frameworks, Russia currently operates under Federal Law No. 259, the “law on digital financial assets,” which provides the legal basis for the issuance and circulation of digital assets.

However, this legislation does not specifically address the creation or regulation of cryptocurrency exchanges. Therefore, the Russian government’s initiative may fall into the legal limbo of its own law.

Yaroslav Schitzle from Rustam Kurmaev and Partners law firm emphasized the lack of a clear and unified legal mechanism for the creation and operation of cryptocurrency exchanges under current Russian regulations. The only relevant regulation available is the Experimental Legal Regime (EPR), a law created to support innovative projects.

The introduction of these exchanges is expected to be rolled out in stages, with access initially restricted to a select group of users, including subsidiaries of major exporters and importers, before expanding to the general public.

Mikhail Uspensky, a member of the expert council on cryptocurrency legislative regulation in the State Duma, gave his opinion on the matter. Uspensky noted that “the contours of the future experiment are entirely at the mercy of the regulator.” In other words, the development of this project should be left to the Russian legal environment.

Impact of sanctions

Despite the potential benefits, the project is fraught with significant risks, particularly with regard to sanctions imposed against Russia. The transparency of blockchain technology could lead to serious consequences if transaction data is leaked.

Uspensky warned that if someone uses these Russian exchanges, their information could be tracked and flagged as suspicious. This could lead to transactions being blocked for people who have not committed any crime but have used sanctioned entities.

Nikita Vassev, founder of TerraCrypto, said that this could significantly limit the user audience of these exchanges. “Only those who have no other choice will use such an exchange. Established and internationally recognized trading platforms will remain the preferred choice for most users unless they have no alternatives,” he added.

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