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Ukraine War: Russians hold $130 billion in crypto

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The Russian prime, minister Mikhail Mishustin has declared that the cryptocurrency holdings of Russians are worth billions of dollars, however, the government is yet to adopt a regulatory framework for the cryptocurrency industry.

According to him, at the annual report presentation of the Russian government, Russians collectively hold more than 10 trillion rubles ($130 billion) in cryptocurrencies like Bitcoin, Ethereum and so on.

The prime minister did not mention the source for this figure, noting that the amount is based on “various estimates.” He stated, “We are well aware that we have more than 10 million young people having opened crypto wallets so far on which they have transferred significant amounts of money, which exceeds 10 trillion rubles.”

What you should know

  • The latest estimations of Russian crypto holdings cited by the prime minister implies that the figure is close to Russia’s gold stash, which reportedly amounted to $140 billion as of late March 2022.
  • According to the United States’ government estimations, Russia’s gold holdings make up about 20% of the country’s central bank’s overall reserves.
  • The latest numbers from the Russian government come months after the Bank of Russia announced plans to assess the size of local crypto holdings last year.
  • The central bank has since estimated Russia’s annual crypto transactions to be worth around only $5 billion. Earlier this year, some sources, like the TASS news services, had estimated Russia’s total crypto holdings to amount to $214 billion.
  • Despite Russians increasingly investing in crypto, due to sanctions by the West as a result of the ongoing war, the Russian government is yet to adopt clear rules to regulate the growing cryptocurrency market, with different government structures failing to reach a consensus on how to regulate the industry.
  • On Friday, the Russian Finance Ministry filed another version of the Russian crypto bill with the government after amending the document in accordance with remarks from other ministries and regulators.
  • The Russian Central Bank, Governor Elvira Nabiullina, earlier this year, had previously asked for the total ban of crypto related transactions as the nation is one of the biggest local skeptics of crypto.
  • Because Russia is becoming the world’s most sanctioned country, a number of global officials have expressed concerns over the growing narrative of Russia’s potential to use crypto to evade sanctions.
  • Because of these concerns, on Friday, the European Union Council issued the fifth package of restrictive measures against Russia, approving a prohibition on providing “high-value crypto-asset services to Russia.” The council said in the official statement that “This will contribute to closing potential loopholes.”
  • Earlier this week, the Bank of Russia’s First Deputy Governor Ksenia Yudaeva reportedly argued that sanction evasion with crypto in Russia is “practically impossible,” particularly for large transactions.
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Some major executives in the cryptocurrency industry are confident that crypto is of no use for Russians as an instrument to evade sanctions. Changpeng Zhao, the founder and CEO of Binance, the world’s largest crypto exchange by trading volumes, and also recently made it into the top 20 list of the richest people in the world, declared on Wednesday that Russians cannot really use cryptocurrency to escape sanctions because crypto transactions are not anonymous.

He stated, “Most transactions do need to go through a centralized exchange, any large transactions of value, because the decentralized exchanges don’t have enough liquidity yet. […] So that’s a misconception that Bitcoin is anonymous. Bitcoin’s anonymous feature is very, very weak.”

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