New Central Bank Crypto Rules ‘Will Ban USDT Trading in Russia’: What This Means for the Russian Crypto Market

Recent regulatory developments from the Central Bank of Russia signal a significant tightening of the country’s stance on cryptocurrency trading, particularly targeting popular stablecoins like Tether (USDT). Experts analyzing the newly issued crypto rules have concluded that these regulations will effectively prohibit the trading of USDT within Russia’s emerging crypto ecosystem. However, the rules stop short of banning the use of USDT or other stablecoins as payment or settlement instruments in cross-border trade.

This nuanced regulatory approach reflects Russia’s broader geopolitical and economic considerations as it seeks to balance crypto innovation with sanctions compliance and national security.

Background: The Central Bank’s Crypto Sandbox and New Trading Rules

The Central Bank of Russia has been gradually developing a regulatory framework to govern crypto trading, culminating in the establishment of a crypto sandbox. This sandbox, supervised directly by the Central Bank, is designed to allow Russian firms to experiment with using cryptocurrencies in international trade deals, particularly to circumvent traditional financial restrictions caused by Western sanctions.

According to a report by Russian media outlet RBC, the Central Bank has issued a set of rules ahead of officially approving crypto trading within this sandbox environment. These rules are set to take effect on May 26, 2025, and will govern which cryptocurrencies are permitted for trading on Central Bank-approved exchange platforms.

The sandbox is expected to expand soon, allowing qualified and “super-qualified” investors-typically institutional or high-net-worth individuals-to participate in crypto trading under strict regulatory oversight.

Key Provisions: Restricting “Hostile” Issuers and Protecting National Interests

The newly released rules impose several important restrictions on the types of coins eligible for trading:

• No Securities from “Hostile” Issuers: Cryptocurrencies linked to issuers from countries deemed “hostile” to Russia will be banned. Here, “hostile” refers to nations that have imposed or adhere to sanctions regimes against Russia.

• Preference for “Friendly” Countries: The rules favor crypto projects with a foothold in countries considered “friendly” or neutral toward Moscow.

• Risk of Token Blocking or Burning: The regulations explicitly mention the possibility that tokens could be blocked or even destroyed (“burned”) by issuers, payment agents, or controlling individuals. This clause is widely interpreted as a safeguard against sanctions enforcement, allowing token issuers to restrict access for Russian users if required.

These provisions collectively create a regulatory environment that excludes many major stablecoins, particularly those issued by entities in Western countries.

USDT and Other Stablecoins: Effectively Banned from Trading

While the Central Bank did not explicitly name any cryptocurrencies in its new rules, experts agree that the criteria effectively exclude USDT and most other popular USD-pegged stablecoins from being traded on approved Russian platforms.

Georgy Gukasyan, Director of the Tax and Legal Department at DRT (formerly Deloitte’s Russian branch), noted that the Central Bank’s definitions are “quite broad and may cover some stablecoins,” implicitly including USDT.

Mikhail Uspensky, a member of Russia’s expert council on crypto regulation, was more direct, stating that USDT “does not meet the bank’s new criteria, meaning it will not be able to circulate in Russia.”

However, Uspensky emphasized that the regulations do not prohibit the use of stablecoins for international settlements, indicating that Russian firms can still utilize USDT and similar assets in cross-border trade, just not for domestic trading on sanctioned platforms.

The Role of KYC and Sanctions Compliance in Restricting USDT

A critical aspect of the USDT ban relates to Tether’s Know-Your-Customer (KYC) and Anti-Money Laundering (AML) protocols. Gukasyan explained that Tether’s obligation to redeem USDT tokens for fiat dollars applies only to token holders who have passed stringent KYC checks.

Since these protocols comply fully with international sanctions regimes against Russia, Tether can, at its sole discretion, refuse to redeem tokens held by Russian users who fail verification. Moreover, Tether has the technical ability to freeze or block tokens in any user’s wallet at any time.

This capability was demonstrated in March 2025 when American authorities seized control of the Russian crypto exchange Garantex’s domains and froze $26 million worth of funds. Tether cooperated with the crackdown by freezing millions of USDT tokens held in Garantex wallets.

Implications for Russian Investors and Crypto Firms

The new Central Bank rules present significant challenges for Russian crypto investors and firms:

• Trading Restrictions: USDT trading will be effectively banned on official Russian crypto exchanges operating under the Central Bank’s supervision.

• Limited Access to Major Stablecoins: With USDT and likely other major stablecoins excluded, Russian investors may face reduced liquidity and fewer options for stablecoin trading.

• Continued Use in Cross-Border Trade: Despite domestic trading bans, firms can still use stablecoins like USDT for international payments and settlements, preserving some utility for global commerce.

• Increased Regulatory Oversight: The Central Bank’s sandbox approach and strict KYC requirements signal a move toward tighter control and surveillance of crypto activities.

Broader Context: Russia’s Crypto Strategy Amid Sanctions

Russia’s regulatory stance on crypto is deeply influenced by the ongoing geopolitical tensions and sanctions imposed by Western countries. The Central Bank’s rules reflect a strategic attempt to harness the benefits of cryptocurrency for international trade and sanctions evasion while minimizing exposure to Western-controlled crypto infrastructure.

By restricting coins linked to “hostile” issuers and emphasizing projects from “friendly” countries, Russia is effectively building a crypto ecosystem aligned with its geopolitical alliances.

What’s Next? Expansion of the Crypto Sandbox and Regulatory Evolution

The Central Bank plans to expand the crypto sandbox in the coming weeks, potentially allowing more investors and firms to participate under a controlled environment. This expansion will likely come with further clarifications on permissible cryptocurrencies and compliance requirements.

Observers expect ongoing regulatory developments as Russia balances innovation, sanctions compliance, and national security concerns in its crypto policy.

Related Developments and Industry Reactions

• Tether’s Role in Global Crypto Markets: Despite the Russian restrictions, USDT remains the dominant stablecoin globally, widely used for trading, remittances, and DeFi applications.

• Expert Views on Crypto Regulations: Industry experts continue to debate the impact of geopolitical factors on crypto regulation, with some warning that fragmented rules could hinder global crypto adoption.

• Comparisons with Other Jurisdictions: Russia’s approach contrasts with more open crypto policies in countries like the UAE and Singapore, highlighting the diversity of regulatory philosophies worldwide.

Further Reading

• How Tether Co-Founder William Quigley Views Crypto Regulations in Trump’s Second Term

• Trump Appoints PayPal Veteran David Sacks as ‘White House AI and Crypto Czar’

• XRP Price Ready for Comeback: Analysts See Bull Movement and Strong Potential for Upward Trend

• Ripple Behind Trump’s XRP Post? Could This Controversy Trigger a Rally to $1,000?

• XRP Price Prediction: South Korean Investors Bet Big on Ripple, Can XRP Reach $5 in May?