Russia Ditches USDC, Ties it to Sanctions Fees

Russia's Deputy Finance Minister, Ivan Chebeskov, recently expressed support for Bitcoin, Ethereum, USDT, and USDC, stating that they would be included in a controlled whitelist under Russia's new digital-asset law. However, this seemingly positive development quickly took a turn when the same official characterized USDC as an 'unfriendly' asset, subject to commissions, technical hurdles, and 'advice' to encourage citizens to consider alternatives.

The inclusion of USDT in the whitelist but not USDC has led some experts to suggest that Russia is establishing a market-cap filter, mandating the acceptance of assets with a market capitalization above 5 trillion rubles. Meanwhile, the sanctions-logic filter appears to be discouraging participation in USDC.

The law behind this flip-flop was passed on April 22 with 327 out of 340 votes and must be finalized by July 1, 2026. It has two goals: establishing a retail whitelist with specific eligibility requirements, including market capitalization and trading volume; and empowering the Russian Central Bank and Ministry of Finance to impose economic incentives, such as commissions or recommendations, on assets owned by companies in 'unfriendly' jurisdictions.

The disparity between USDT and USDC's treatment has significant implications beyond Russia. With over 50 billion rubles ($650-700 million) in daily crypto transactions, Russia's reliance on stablecoins like USDT is substantial. The country's informal market hierarchy appears to be forming: USDT for trading, BTC and ETH for value storage, and USDC as a secondary choice that satisfies the paper market-cap criterion.

Circle, the issuer of USDC, has been subject to scrutiny due to its adherence to rules and ties to the US. In contrast, Tether's opaque operation has allowed it to maintain its position in Russia's market. The 'unfriendly asset' fee imposed on USDC is a result of Russia's regulatory framework, which flips the premise of transparency and local presence, attractive to regulators in Washington, Brussels, and Singapore, on its head.

Chebeskov suggested that stablecoins tied to the ruble or instruments tied to the dirham from 'friendly' countries could be an alternative to USDC. The Kyrgyzstan-issued stablecoin A7A5 has handled over $110 billion in transactions since 2025, surpassing all other non-dollar stablecoins in terms of worldwide market capitalization.