In a recent statement, a senior official from Russia’s Finance Ministry emphasized the urgent need for the country to develop its own stablecoins, particularly after the blocking of Russia-linked digital wallets holding Tether’s USDT stablecoin.
According to a Reuters report, this development comes in response to heightened sanctions from the West, which have complicated international financial transactions for Russian entities.
Russia Considers Developing Internal Stablecoins
Stablecoins, cryptocurrencies designed to maintain a stable value by pegging them to traditional currencies like the US dollar, have gained significant traction in recent years, serving as a bridge for users moving funds across different cryptocurrencies or converting them into cash.
Prior to the blockage, Tether’s USDT stablecoin, was a favored payment method among Russian firms, facilitating smoother transactions in an increasingly restrictive environment.
Osman Kabaloev, the deputy head of the Ministry of Finance’s financial policy department, remarked, “The recent blockage makes us think that we need to consider creating internal tools similar to USDT, possibly pegged to other currencies.”
The situation escalated when Garantex, a Russian crypto exchange, reported on March 6 that Tether had blocked wallets on its platform containing over 2.5 billion rubles (approximately $30.12 million).
This action prompted Garantex to suspend operations shortly after facing European Union sanctions, highlighting the precarious position of Russian firms reliant on foreign stablecoins.
Meanwhile, Elvira Nabiullina, the head of Russia’s central bank, reiterated her opposition to the use of cryptocurrencies for domestic payments.
However, she acknowledged that Russian firms are actively experimenting with international cryptocurrency transactions as part of a broader strategy to navigate the limitations imposed by Western sanctions.
Trump’s DeFi Platform Launches USD1
In a parallel development in the United States, President Donald Trump’s decentralized finance (DeFi) platform, World Liberty Financial (WLFI), recently introduced a new stablecoin named USD1.
This token is pegged to the US dollar and is now operational on both the Ethereum and Binance blockchains, although its launch was not formally announced by the company on March 24.
The emergence of stablecoins like USD1 is gaining momentum in the crypto landscape, attracting attention from US lawmakers who have introduced several bills to bolster the sector.
Major players in the industry, including Tether, reported significant profitability, with the company posting $13 billion in profit for 2024. Meanwhile, Circle, the issuer of the USDC stablecoin, is preparing for an initial public offering (IPO).
These companies support their stablecoins with US Treasury securities, which allow them to generate substantial yields. This financial model has proven to be lucrative due to the relatively low operational costs compared to traditional corporate structures.
Featured image from DALL-E, chart from TradingView.com
