Russia’s sanctioned business association, the Russian Union of Industrialists and Entrepreneurs (RSPP), is considering the establishment of a national Bitcoin fund to promote the use of digital financial assets in foreign trade. This move comes as Russian businesses seek alternatives to bypass Western sanctions. According to Andrey Lisitsyn, the managing director of financial policy and financial markets at RSPP, the fund would be based on Bitcoins produced by local miners. Russia would then issue digital financial assets (DFAs), which are essentially centralized digital tokens, backed by this fund. This would enable the legal use of cryptocurrency in cross-border transactions through IOUs, instead of direct trades with the crypto itself.
Despite efforts by multiple banks to attract retail investors, DFAs have not gained significant traction in Russia. Bank of Russia Chair Elvira Nabiullina, who is optimistic about DFAs, acknowledged in a press conference in June that the market lacks liquidity and is too fragmented. As of June, the total market volume of DFAs in Russia exceeded 96 billion rubles (approximately $1.1 billion), a milestone that took the country two years to achieve.
Lisitsyn explained that cross-border trades could be conducted through claims to the underlying crypto in the form of IOUs. This would prevent the circulation of crypto and avoid speculative demand, as cryptocurrency is not considered legal tender in Russia. He also suggested that the fund could be established in a special administrative region, where miners can open accounts and deposit mined Bitcoins.
However, Lisitsyn acknowledged that the scheme would require multiple accounts on various global crypto exchanges to facilitate foreign trade. This raises concerns 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 provide further details.
The RSPP was sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) in August 2023. The OFAC stated that “Russian elites should not assume that they can continue business as usual while the Kremlin wages war against the Ukrainian people.”