Russia's call for stronger encryption regulation is on the rise, demanding Telegram to integrate with the banking system.

In November 2025, Yevgeny Masharov, a member of the Legislative Review Committee of the Social Chamber of Russia, called on the Federal Assembly to quickly establish a regulatory framework for Crypto Assets, suggesting that transactions be limited to the Moscow exchange and licensed banks, and that criminal liability be imposed for illegal transactions. The background of this initiative is that Russian IP addresses accounted for 28% of the total traffic of a certain CEX platform in October, with 4.9 million visits, reflecting the urgent demand for alternative assets among the public amid the devaluation of the ruble, capital controls, and international sanctions.

Breakthrough in Regulatory Stalemate: Shift from Total Ban to Regulated Management

Masharov's proposal marks a possible turning point in Russia's cryptocurrency policy. Previously, the central bank and the Ministry of Finance had opposing positions—the central bank governor Nabiullina insisted on a comprehensive ban like China's, while Finance Minister Siluanov advocated for tax compliance. Geopolitical changes in 2025 tipped the scales in favor of the latter, and the Ministry of Finance's draft “Digital Asset Circulation Law” has been submitted to the State Duma, with key内容包括: exchange licensing system, 13% tax rate on trading profits, and a maximum of 7 years imprisonment for illegal operations.

The urgency of regulation comes from the integrated encryption wallet of Telegram. This instant messaging application has 60 million users in Russia, and its wallet function supports direct buying and selling of crypto assets, completely bypassing traditional financial regulation. Masharov warned: “This allows all citizens to trade digital assets in a regulatory vacuum, rendering anti-money laundering systems ineffective.” The Ministry of Finance proposed that platforms like Telegram must connect with the Russian banking system to implement customer identity verification.

User Behavior Analysis: Economic Pressure Drives Crypto Adoption

Similarweb traffic data shows that in October 2025, Russian users accounted for 28% (4.9 million visits) of the total traffic of a certain CEX, 16% of another CEX, and 5% of Gate. This means that at least 6 million Russians are using foreign exchanges each month, and the actual number could be higher — many people hide their location using VPNs. This scale has grown by 400% in two years, in stark contrast to the 45% depreciation of the ruble against the dollar.

A survey by Vyberu Market Research Company of 2,500 respondents reveals deeper motivations. 10% of Russians explicitly wish to invest in Crypto Assets, with 35% seeking “independence from the banking system or political risks” and 30% valuing “global 24/7 trading capabilities.” Although only 3-5% admit to holding crypto assets, the actual percentage may reach 15%, as most are unwilling to disclose sensitive financial information.

Key Indicators for Cryptocurrency Use in Russia

• Certain CEX Russian traffic: 28% (4.9 million visits)
• Potential users: 6 million+ (monthly active)
• Ruble depreciation: 45% (within two years)
• Investment willingness: 10% population
• Main motivation: Financial independence (35%), Global access (30%)
• Actual holding rate: estimated 15%

Economic Background Interpretation: Financial Alternatives in a Sanctioned Environment

Ari Redbord, the Global Policy Director of TRM Labs, pointed out: “The combination of a weak ruble, capital controls, and international sanctions has accelerated the adoption of crypto assets.” In September 2025, the monthly cross-border crypto transfers by Russian residents exceeded $3 billion, which is three times the officially permitted cross-border cash limit. This flow of funds is primarily realized through USDT and USDC, avoiding monitoring by the banking system.

The boundary between legitimate demand and evading sanctions is blurred. On one hand, ordinary citizens use crypto assets to preserve their wealth - Russia's inflation rate remains high at 12%, while bank deposit rates are only 5%; on the other hand, sanctioned enterprises use encrypted channels for international trade, such as oil distributors accepting payments in USDT from Turkey and China. Blockchain analysis shows that Russian-related addresses receive 4-5 billion dollars in stablecoins each month and send 2.5-3.5 billion dollars.

Geopolitical Dimension: Crypto Assets as Strategic Tools

Crypto Assets have special geopolitical significance in Russia. In August 2025, Andrei Lugovoy, head of the State Duma's digital currency working group, stated: “Digital assets may help break financial isolation.” There are indications that some government agencies are experimenting with using Crypto Assets for energy trading, although the Kremlin has officially denied this. Such strategic considerations complicate regulatory debates—over-regulation may lead to missed technological opportunities, while a hands-off approach raises concerns about uncontrolled capital flight.

Comparative studies show the choices of countries in similar situations. Iran has legalized cryptocurrency mining and uses it for import settlements; Venezuela mandates the use of the Petro for tax payments; while China has chosen a complete ban. Russia seems to be seeking a middle ground, with a draft from the Ministry of Finance allowing licensed trading but prohibiting cryptocurrencies as a means of payment. Whether this compromise will be effective depends on the balance of law enforcement capabilities and market acceptance.

The Tug of War Between National Sovereignty and Financial Freedom

The cryptocurrency regulatory dilemma in Russia is essentially a classic conflict between national monetary sovereignty and individual financial freedom in the digital age. When 6 million citizens vote with their feet to choose offshore crypto platforms, it is both a vote of confidence in the ruble and a yearning for financial autonomy. The challenge for the government is that strict regulation may breed a more concealed black market, while complete deregulation raises concerns about the effectiveness of monetary policy. In this financial war without gunpowder, cryptocurrencies serve as both a tool for evasion and a solution, and Russia's choices will provide important references for countries facing similar dilemmas globally.