There’s a hole in Russia’s finances, and it’s becoming too big for the Kremlin to ignore.
In September, the government set a budget deficit cap of $46 billion for 2026.
The problem? The deficit already stood at 91% by the end of February, Russian media outlet Vyberu wrote, with pundits blaming a 50% drop in oil and gas revenues.
Rising oil and gas prices may help alleviate some of the pain. But belts clearly need to be tightened in Moscow. That’s why the Ministry of Finance has made preventing capital from leaking overseas its major priority this year, starting with crypto.
“[The Moscow Exchange] says Russian traders pay approximately $15 billion annually in fees to overseas crypto exchanges,” Yuriy Brisov, a legal expert and a partner at the consultancy Digital and Analogue Partners, told DL News. “This is revenue the state wants to redirect to domestic licensed platforms.”
The ministry has pencilled in July 1 as the date Russia will begin regulating crypto exchanges, aware that citizens spend almost $650 million a day trading cryptocurrencies.
Two-pronged strategy
Experts say the ministry is preparing a two-pronged approach to crypto regulation to ensure Russian money stays in the domestic economy.
This will involve blocking citizens from trading on any platform that does not have an operating permit and offices in Russia. The second prong is a taxation regime on permit-holding crypto exchanges.
Moscow is “targeting July 1” for all these regulations to come into effect, Brisov said.
“[The government will] introduce mandatory licensing for all crypto exchange operators, including foreign firms.”
Roskomnadzor, Russia’s web censor, is “reportedly preparing technical mechanisms, similar to those it has used to block YouTube,” Brisov said.
The censor has used Domain Name System filtering methods, which stop web browsers from connecting to backlisted domains by refusing to resolve them to an Internet Protocol address.
It also makes use of tools that stop users from using bypass methods to access sites.
Roskomnadzor is also poised to spend $29 million on artificial intelligence-powered solutions, which could also turn against crypto traders who try to skirt new regulations.
Banks’ crypto monopoly
Noises from the Russian business world suggest regulators want commercial banks, rather than domestic tech startups, to become the sole legal platforms for domestic crypto trading.
This would allow the crypto-sceptical central bank and its long-serving governor Elvira Nabiullina to maintain some level of control over the Russian crypto market.
“The architecture of the proposed framework points clearly toward a bank-centric model,” Brisov said. “The central bank is considering a proposal that would allow banks and Russian brokerage firms to operate crypto exchanges through a simplified notification-based authorisation, rather than requiring a new licence.”
Such a move would likely make a July 1 deadline more feasible, particularly as some of Russia’s top banks have indicated a keenness to start offering their clients crypto trading services.
Nabiullina has framed the notification-based authorisation proposal as a way of “leveraging banks’ existing anti-money laundering compliance infrastructure,” Brisov said.
Will the ministry’s regulation gambit help it plug the financial hole?
Perhaps only partially, the evidence suggests.
In March, the Federal Tax Service said it expects to receive around $7 million in taxes from industrial crypto mining firms for the financial year 2025.
Mining industry chiefs had previously spoken of an annual tax contribution worth $74 million from the mining sector.
Efforts to force Russians to trade crypto exclusively on bank-run apps could also prove hard to enforce, experts say.
“China’s experience suggests that strict bans rarely eliminate crypto activity,” Brisov said. He explained that Russians will continue to turn to virtual private networks, peer-to-peer trading, and decentralised exchanges in a bid to continue trading without restrictions.
“The blocking [efforts] will inconvenience casual users and redirect some volume to domestic platforms,” the legal expert said. “But it won’t create a sealed system. Russia has roughly 20 million crypto holders. You cannot build a wall around that market without significant leakage.”
Tim Alper is a News Correspondent at DL News. Got a tip? Email him at tdalper@dlnews.com.
