Russia is set to launch two new cryptocurrency exchanges, one in Moscow and another in St. Petersburg, which will specifically focus on facilitating foreign trade.

These exchanges are anticipated to function under distinct legal conditions, and there are concerns among experts regarding the potential challenges stemming from sanctions and regulatory issues.

The decision to establish these exchanges follows discussions held earlier this month between the Central Bank of Russia and the Ministry of Finance concerning the establishment of a Russian Crypto Exchange.The objective behind these developments is to strengthen Russia’s participation in the global cryptocurrency market.

The plan entails utilising the existing St. Petersburg Currency Exchange for one of the cryptocurrency exchanges, while the other will be located in Moscow.

There is currently no clarity on whether the Moscow Exchange will be integrated into the existing Moscow Exchange or will operate separately under particular legal regulations.

Russia intends to introduce a stablecoin linked to the Chinese yuan (RMB) and the BRICS currency basket, as part of its broader strategy to fortify its financial ties with major global economies and expand its array of cryptocurrency offerings.

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Crypto experts have highlighted potential challenges associated with the creation of stablecoins, particularly concerning their convertibility and liquidity.

Under Russian law, stablecoins are categorised as digital financial assets due to the presence of an issuing entity responsible for maintaining their value.

The new exchanges and stablecoins are expected to function under an experimental legal framework, enabling Russia to test and refine its cryptocurrency regulation approach.

Initially, these platforms are likely to be accessible only to large businesses and key economic entities, with smaller businesses and individuals gaining access at a later stage.

While these developments could potentially strengthen Russia’s cryptocurrency market, experts have voiced concerns about associated risks. The transparency of blockchain technology raises the possibility of exposing transactions to international scrutiny, potentially leading to sanctions or restrictions.

In a significant development, Russian President Vladimir Putin early this month signed a law legalising cryptocurrency mining in Russia. This new law enables registered Russian entrepreneurs to engage in cryptocurrency mining activities.

The law permits only registered Russian businesses and individual entrepreneurs to mine cryptocurrency, while others can also mine without formal registration, provided they adhere to energy consumption limits set by the government.

The legislation introduces various new terms to Russia’s crypto landscape, such as mining pools, mining infrastructure, address identifiers, and the role of the pool master.

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Russia’s increasing interest in cryptocurrencies and the recent legalisation of crypto mining can be seen as a response to the impact of Western sanctions on its international trade.

In late July, the Russian Parliament passed a bill allowing the use of cryptocurrency for cross-border transactions, and the new crypto mining law further signifies a strategic approach towards broader cryptocurrency utilisation in Russia.

It’s worth noting that while Russia is progressing with the allowance of crypto mining and the use of crypto for international transactions, the domestic use of cryptocurrencies remains prohibited.

These new laws have the potential to strengthen trade relationships with partner countries, but they also subject Russia and its allies to heightened scrutiny from Western regulators, and their impact will be closely observed once they come into effect.