Bitcoin
Sanctioned Russian Business Union Considers Creating National Bitcoin Fund
Russia’s sanctioned business association is considering a national Bitcoin fund to improve the use of digital financial assets in foreign trade.
The Russian Union of Industrialists and Entrepreneurs (RSPP), a sanctioned Russian union representing the country’s richest business figures, is considering launching a national crypto fund to use crypto in foreign trade, as Russian companies explore options to circumvent sanctions westerners.
On a interview With Russian newspaper Vedomosti, RSPP’s managing director for financial policy and financial markets Andrey Lisitsyn said the fund would be based on Bitcoins (BTC) produced by local miners. Russia would then issue digital financial assets (DFAs) — basically centralized digital tokens — backed by this fund, allowing the legal use of cryptocurrency in cross-border transactions through IOUs rather than direct transactions with the crypto itself.
So far, DFAs have failed to gain any significant traction in Russia, despite efforts by several banks to attract retail investors. Although Bank of Russia Governor Elvira Nabiullina appears to be betting high in DFAs, she admitted at a press conference in early June, that the market suffers from a lack of liquidity, noting that it is “very fragmented”. In June, the total volume of the AFDs market overcome 96 billion rubles (approximately US$1.1 billion), a milestone that took the country two years to reach.
Lisitsyn explained that cross-border trading could be conducted through claims to the underlying crypto in the form of IOUs, preventing its circulation and avoiding speculative demand, as crypto is banned in Russia as legal tender. He added that the fund could be established in a special administrative region, allowing miners to open accounts and deposit mined Bitcoins.
However, Lisitsyn admitted that the scheme would require the creation of multiple accounts on several global crypto exchanges to facilitate cross-border trading, raising a “significant question” about the potential for these accounts to be blocked. To address this issue, he proposed the creation of a network of “payment agents,” although he did not elaborate.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the RSPP in August 2023, saying that “Russian elites must rid themselves of the notion that they can operate business as usual while the Kremlin wages war against the Ukrainian people.”