Russia is creating a ‘closed crypto circuit’ dominated by sanctioned banks

Russia is preparing to legalize cryptocurrency transactions, but its own restrictions, on top of Western sanctions, are expected to largely cut it off from the global crypto market.

Regulators in Moscow now want to channel most coin operations through traditional financial players such as banks and brokers, effectively limiting legal access to digital assets.

Russian banks to be granted crypto exchange licenses

The Central Bank of Russia (CBR) is suggesting allowing established financial institutions, such as commercial banks and brokerages, to work with cryptocurrencies under their existing licenses.

The head of the monetary authority, Elvira Nabiullina, discussed the matter with participants in the regulator’s annual meeting with credit institutions.

Speaking at the event organized by the Association of Russian Banks (ARB), the governor stated:

Quoted by the business news outlet RBC, Nabiullina highlighted that such organizations already have the necessary anti-money laundering systems in place.

She also noted that banks will be well-protected from the risks they will assume in this volatile market by limiting their exposure to 1% of their capital.

Russia to rely on domestic crypto infrastructure

Nabiullina’s statements come after the central bank and the finance ministry drafted a bill designed to regulate cryptocurrency operations like investment and trading.

The legislation is based on a regulatory concept announced by the CBR at the end of last year and must be adopted by July 1, 2026, at the latest.

One of the pillars of the new crypto policy is to use Russia’s existing financial infrastructure, including banking institutions and stock exchanges, to process digital-asset transactions.

Another representative of the CBR, the head of its Investment Finance Intermediation Department, Olga Shishlyannikova, unveiled that mutual investment funds will eventually be permitted to touch coins, too.

While the traditional financial organizations will be able to launch crypto platforms without much hassle, it’s unclear how many of the existing crypto firms will be allowed to remain in business.

Officials have previously indicated that the latter will be required to meet a separate set of strict requirements to get their activities authorized.

The same applies to foreign service providers, including major global exchanges, which will have to set up a local subsidiary and move servers to the country if they want a share of the Russian market.

Restrictions and sanctions to isolate Russia from global crypto industry

Critics point out that Moscow’s current approach is too restrictive and threatens to isolate Russia from the global cryptocurrency market.

Once the new regulatory framework enters into force, Russians will be able to legally access crypto assets exclusively through intermediaries approved by their government, with few exceptions for non-residents, miners, and entities involved in foreign trade.

Considering the impact of Western sanctions on crypto-related flows, there is a real risk of ending up with a “self-contained crypto circuit,” RBC noted in another article, after consulting experts in the field.

The proposed rules would make it impossible to transfer digital coins to platforms that don’t maintain a presence or have no business with Russian banks and exchanges.

At the same time, some of these institutions are also targeted with financial restrictions imposed over Moscow’s invasion of Ukraine.

Among them are Russia’s largest bank by assets, Sberbank, which already offers crypto derivatives, PSB, a bank linked to the sanctioned ruble-pegged stablecoin A7A5, and the Moscow Exchange (MOEX), which intends to launch crypto trading right after the new regulations are implemented.

According to earlier statements by officials in Moscow, Russian crypto investors will be given a transitional period during which they need to legalize their holdings by transferring them to a licensed domestic platform. Criminal liability for illegal crypto-related transactions will be introduced in 2027.