Russia

Russia’s banking sector is publicly demanding substantial liberalization of the country’s pending cryptocurrency legislation, warning that overly restrictive rules will isolate the market and drive activity underground. The Association of Russian Banks has submitted formal proposals to parliament’s financial committee calling for approval of non-custodial wallets, foreign platform access, and expanded coin whitelisting, reversing core prohibitions in the current draft law.

• Association of Russian Banks submitted formal liberalization proposals to parliament’s Financial Markets Committee in April
• Current draft law restricts transactions to custodial wallets and licensed domestic intermediaries only
• Parliamentary Competition Committee warned that excessive rigidity risks monopolization and market isolation from global standards

• 3 Major cryptocurrencies approved for trading under current bill: Bitcoin, Ethereum, and Solana
• April Filing date of draft law, still pending floor debate in State Duma
• 2 Reading cycles remaining for amendments before legislation advances further

Russia’s banking establishment is moving to reshape the country’s emerging cryptocurrency framework before it becomes law, signaling that the financial sector views the current legislative approach as economically counterproductive.

The Association of Russian Banks has delivered a detailed set of amendments to Anatoly Aksakov, chairman of the State Duma’s Financial Markets Committee, targeting what bankers describe as unnecessarily restrictive provisions in the draft law titled “On Digital Currency and Digital Rights.” The proposal challenges the bill’s core architecture: instead of permitting only transfers to custodial accounts and licensed domestic intermediaries, the ARB wants Russian citizens and institutions to access non-custodial wallets abroad and use foreign cryptocurrency platforms without legal penalty.

The submission comes as the draft legislation remains in committee ahead of its first floor debate, meaning amendments can still be incorporated before the second reading, a narrow window that has prompted the banking sector to act quickly.

Association of Russian Banks seeks direct access to foreign platforms and self-custody wallets

The ARB’s core demand centers on reversing the bill’s prohibition on direct transfers to non-custodial wallets outside Russia and its ban on transactions via unregistered foreign exchanges. Under the current draft, Russian citizens would face legal liability for moving cryptocurrency to personal wallets or using platforms that have not been licensed by domestic authorities.

For institutional participants like banks, the restriction is even more severe: they would be permitted to exchange digital currencies only for Russian-issued tokenized assets or other regulated instruments, locking the sector into a domestic-only ecosystem.

This framework mirrors regulatory approaches in jurisdictions seeking maximum capital control and tax visibility, but Russian bankers argue it will achieve neither while generating competitive disadvantage.

By requiring all transactions flow through state-monitored custodians and domestic intermediaries, the law would effectively prevent Russian financial institutions from participating in global crypto markets where liquidity, price discovery, and asset diversity far exceed what a domestically-isolated market could offer.

The ARB’s push for whitelisting foreign platforms and permitting non-custodial transfers reflects the standard regulatory model in developed markets like Switzerland, Singapore, and Japan, jurisdictions that have attracted cryptocurrency infrastructure investment precisely by allowing institutional and retail access to the full range of global market participants.

The banking sector’s intervention signals confidence that the broader political objective, bringing cryptocurrency activity into the open economy for tax and regulatory purposes, does not require severing access to foreign markets.

Parliament’s Competition Committee questions whether isolation will drive users underground

The ARB’s concerns have found formal backing from within the legislative process itself. The State Duma’s Committee for Protection of Competition recently reviewed the draft bill and issued a public warning that its “excessively stringent regulation compared to global regulatory practices” may prevent the legislation from achieving its own stated goals.

The committee’s conclusion directly contradicts the premise underlying the current draft: that tight restrictions will bring cryptocurrency activity out of the informal economy and into the transparent, taxable system.

Instead, competition regulators predict the opposite effect.

If the law imposes restrictions significantly stricter than global benchmarks, preventing access to major foreign exchanges, limiting approved cryptocurrencies to only the three largest by market capitalization, and requiring all transactions through state-monitored channels, Russian users and institutions will face economic incentives to continue operating in offshore markets or peer-to-peer networks where such restrictions do not apply.

This outcome would leave the Russian government with neither the tax revenue nor the regulatory visibility it seeks.

The committee further cautioned that by restricting which cryptocurrencies can be traded domestically to Bitcoin, Ethereum, and Solana alone, the law risks creating a market monopoly favorable only to these three assets and their largest holders, rather than fostering competitive conditions for emerging digital assets and the institutions that support them.

The parliamentary warning carries institutional weight because the Competition Committee speaks to market structure risks rather than ideological positions about cryptocurrency. Its position aligns with enforcement experience in other countries: when regulatory regimes diverge sharply from global norms, compliance often declines while regulatory arbitrage increases.

Banks propose stablecoin framework and expanded custodial standards the draft law ignores

Beyond access and whitelisting issues, the ARB has identified regulatory gaps in the draft legislation itself. The current bill makes no provision for regulating stablecoins, digital tokens pegged to fiat currencies or backed by physical assets, despite their growing institutional use globally.

Russian banks argue that permitting stablecoins on a regulated basis would serve the bill’s core function: channeling crypto activity into the formal system where it can be monitored and taxed.

Without this option, the ARB contends, users will employ offshore stablecoins of questionable backing or solvency, leaving Russian authorities with even less visibility than they would have by simply allowing domestic regulation of the asset class.

The ARB has also called for relaxing the monetary authority’s standards for which cryptocurrencies can be approved for domestic trading. Currently, the bill restricts the market to coins meeting thresholds for market capitalization and trading liquidity, a gate-keeping mechanism designed to limit systemic risk.

However, the banking sector argues these thresholds should be set through transparent, quantitative criteria rather than discretionary judgment, and that the bar should be slightly lower to permit institutional-grade assets beyond the current three coins to trade domestically.

This would allow Russian institutions to diversify holdings and serve client demand without driving transactions to unregulated channels.

The banks are also seeking to remove a proposed requirement that digital depositories disclose detailed information about client identity and holdings to authorities, arguing instead for judicial oversight protections similar to those governing traditional banking relationships.

Amendment window closes as second reading approaches, leaving outcome uncertain

The timing of the ARB’s intervention reflects the practical realities of Russian legislative procedure. The draft law was filed in April but has not yet reached the floor of the State Duma for first reading. Once first reading concludes, amendments can be proposed for the second reading, a process that typically occurs within weeks.

After the second reading, the law moves to third reading with minimal amendment opportunity, then to presidential signature. This compressed timeline means the ARB’s proposals represent likely the last formal opportunity for the financial sector to influence the bill’s core provisions.

The fact that both major banks and the parliamentary Competition Committee have now formally questioned the bill’s restrictiveness suggests there is genuine institutional resistance to the current framework. However, the existence of pushback does not guarantee amendments will be adopted.

The draft law reflects regulatory philosophy at the Central Bank of Russia and within the presidential administration, actors who may view international alignment as less important than maintaining strict capital controls and maximizing state oversight.

The ARB’s appeal to global regulatory norms and competitive disadvantage carries weight with lawmakers concerned about market structure, but it may carry less weight with security-focused authorities.

The critical next step occurs when the bill reaches the Duma floor for first reading: whether parliamentary committees incorporate material amendments addressing the banks’ core demands on non-custodial access, foreign platforms, and stablecoin regulation will signal whether the legislature views cryptocurrency regulation as a primarily financial and competitive matter or primarily as a tool of capital control and surveillance. Aksakov and the Financial Markets Committee will face direct pressure to justify either adopting or rejecting the banking sector’s proposals before debate begins.