A sanctioned business association considers launching a nationwide Bitcoin fund
Russia’s sanctioned business association, the Russian Union of Industrialists and Entrepreneurs (RSPP), is considering the launch of a national Bitcoin fund to promote the use of digital financial assets in foreign trade. The move comes as Russian businesses explore ways to navigate around 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 centralized digital tokens backed by the fund. This would enable the legal use of cryptocurrency in cross-border transactions through IOUs, rather than 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, however, has shown confidence in DFAs, despite acknowledging a lack of liquidity in the market. The total market volume of DFAs in Russia has reached 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 IOUs representing the underlying crypto, preventing its circulation and avoiding speculative demand. Crypto is currently banned in Russia as a legal tender. Lisitsyn suggested that the fund could be established in a special administrative region, allowing miners to open accounts and deposit mined Bitcoins. However, he acknowledged that setting up multiple accounts on global crypto exchanges would be necessary to facilitate foreign trade, raising concerns about potential account blocks. He proposed the creation of a network of payment agents to address this issue, although he did not provide further details.
The RSPP was sanctioned by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) in August 2023 due to the ongoing conflict between Russia and Ukraine.
