Russia considers issuing Tether-like stablecoin in wake of $30 million USDT freeze

The finance ministry in Moscow is now considering the creation of a Russian cryptocurrency similar to the U.S. dollar-pegged Tether (USDT), local media reported.

The proposal to issue a domestic stablecoin comes after last month Tether blocked billions of rubles’ worth of crypto assets in wallets on a sanctioned Russian exchange.

Finance ministry suggests launching Russian stablecoin

The Ministry of Finance of the Russian Federation (Minfin) is recognizing the need for a stablecoin other than those linked to the U.S. currency, the Tass news agency reported.

Speaking at a banking forum, a high-ranking official revealed that the ministry is now mulling over the launch of a coin similar to the USDT but pegged to a different fiat.

According to Osman Kabaloev, deputy head of the Minfin’s Financial Policy Department, recent developments have shown that stablecoins like Tether “can be dangerous” for Russia.

“This suggests you need to look at the creation of internal instruments such as USDT, possibly tied to other currencies,” he elaborated during a discussion devoted to the payments industry.

“We have no restrictions on the use of stablecoins in the experimental legal regime (ELR),” Kabaloev added in his address to participants in the “Banking system and national economy” conference.

He was referring to Russia’s newly established legal framework for cryptocurrency transactions which allows Russian companies to use digital coins for settlements with foreign trading partners, bypassing international financial restrictions.

The free circulation of Bitcoin and the like in the country’s economy, outside the ELR, has not been legalized yet, with the Central Bank of Russia categorically rejecting such proposals.

Russia’s stablecoin initiative comes after Garantex Tether wallet freeze

The Russian finance ministry has pitched the idea for a domestic stablecoin in the wake of the freezing of around 2.5 billion rubles of USDT held in Russia-linked accounts last month.

In early March, the Russian crypto exchange Garantex announced that Tether, the company issuing USDT, has blocked its wallets with stablecoins worth over $30 million in current exchange rate.

The trading platform described the decision as “a war against Russian crypto market,” warning that other Russian companies can be targeted as well.

“We are temporarily suspending all services, including cryptocurrency withdrawals, while our entire team is working to solve this problem,” Garantex posted on Telegram, adding: “Please note that all USDT in Russian wallets is now under threat.”

Garantex has been sanctioned by both the United States and the European Union for alleged ties to the Russian government and various criminal groups. Its website was seized by law enforcement agencies last month.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has it on its sanctions list for involvement in money laundering, including transactions worth over $100 million related to underground organizations such as the darknet market Hydra and the Conti hacker group.

In late February, the EU banned any dealings with the cryptocurrency exchange as part of its latest package of sanctions imposed on the Russian Federation over its invasion of neighboring Ukraine. The bloc pointed out that the platform supports deposits and withdrawals for the clients of three Russian banks placed under sanctions since 2022.

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