Risks of Using Cryptoassets in Russia and the Potential for Mitigation

The development of the cryptocurrency market and its growing integration into the global financial system has heightened the debate about the risks of cryptoassets to both the global financial system and national financial systems. This paper analyzes the main risks associated with cryptoassets, highlighted both internationally and nationally. These include consumer risks; money laundering and terrorist financing risks; environmental risks; and financial stability risks. The main purpose of the study is to identify the risks of cryptocurrencies in relation to the Russian financial market. Although the risks are identical due to the extraterritorial nature of cryptoassets, the impact of these risks on countries' national financial systems differs significantly. Financial sanctions against Russia also force us to reconsider our established approaches to the assessment of existing cryptoasset risks. Russia has the technological and organizational capacity to mitigate most of the risks. An objective assessment of existing risks and development of balanced approaches to their management open up opportunities for creating a domestic crypto market and using cryptoassets to overcome the sanctions pressure on the Russian financial market.