Russia’s new cryptocurrency legislation has brought platforms like Garantex and Exved into the spotlight as potential vehicles for implementing the country’s evolving crypto regime. Garantex, a prominent exchange with a history of processing transactions for designated actors, and Exved, a cross-border payment service, both founded by crypto entrepreneur Sergey Mendeleev (pictured left), are well-positioned to play crucial roles in Russia’s efforts to mitigate sanctions through digital assets.
These platforms’ capabilities in facilitating ruble-to-crypto conversions and cross-border transactions align closely with Russia’s strategic goals. However, their potential involvement raises significant compliance and regulatory concerns for the international financial community, highlighting the complex challenges posed by Russia’s push into the cryptocurrency space.
Garantex
Garantex is a prominent cryptocurrency exchange that has become a significant player in the Russian crypto market. The platform has found a niche in converting rubles into other currencies, which has become increasingly valuable amid sanctions on Russian banks. Garantex positions itself as a leader in self-regulation for the Russian crypto industry, recognizing its role as a major player in the market. However, Garantex has faced scrutiny from international authorities:
- The exchange has been sanctioned, likely due to concerns about its potential use for illicit activities.
- Garantex has processed transactions for designated actors in Russia and Iran, raising red flags for compliance professionals.
- The platform operates a network of cash exchangers inside Russia and abroad, allowing customers to swap rubles for Tether (USDT).
Exved
Exved is a more recent entrant to the Russian crypto scene:
- It was launched by Sergey Mendeleev, the founder of Garantex.
- Exved is designed as a cross-border payment service powered by Tether’s USDT stablecoin. The platform aims to empower local legal entities to conduct cross-border digital payment services using USDT.
Sergey Mendeleev
Sergey Mendeleev is a key figure in the Russian cryptocurrency landscape:
- He is described as a visionary entrepreneur with a profound understanding of the dynamic world of cryptocurrencies.
- Mendeleev is the founder of Garantex, establishing his credentials in the crypto exchange sector. He has been involved in various crypto ventures, showcasing his active role in the industry. Recently, Mendeleev launched Exved, expanding his influence in the crypto payment sector.
Potential Role in Russia’s New Crypto Regime
The Chainalysis report and other sources suggest that these platforms could play a significant role in Russia’s new cryptocurrency legislation:
- Under the new legislation, the Russian government could officially or unofficially leverage services like Garantex, given its deep liquidity and established presence in the market.
- Blockchain analysts warn that the Russian government may use crypto exchanges like Garantex for sanctions evasion under the new legislation. Both Garantex and Exved have been highlighted as potential resources for Russia to facilitate cross-border transactions, potentially circumventing international sanctions. The ability of these platforms to convert rubles into cryptocurrencies and facilitate cross-border transactions aligns with Russia’s goal of mitigating the impact of Western sanctions and reducing reliance on the U.S. dollar for international trade.
Given their established presence, technical capabilities, and alignment with Russia’s strategic goals, Garantex and Exved, along with Sergey Mendeleev’s expertise, could indeed become key vehicles for implementing Russia’s new cryptocurrency regime. However, this also raises significant compliance and regulatory concerns for international financial institutions and regulators.