According to Bloomberg, Russia is taking steps to start using cryptocurrencies and digital tokens for international trade payments on September 1 to circumvent payment difficulties caused by Western sanctions.
The trial will involve using the National Payment Card System to ease the conversions between crypto and rubles, and to test payments and exchange platforms.
If the trial becomes successful, this move could lead to the establishment of cryptocurrency trading platforms within the country.
The National Payment Card System, created in 2014 by the central bank to oversee domestic interbank payments and Mir cards, was chosen for the trial because of its existing infrastructure and regulatory framework.
As earlier reported, Russia recently passed legislation to legalize crypto mining and regulate digital assets (CBDCs) for cross-border transactions under the watch of the Bank of Russia and the Ministry of Finance.
What Are The Reasons Behind The Move?
The main reason behind Russia’s crypto move is to mitigate the growing challenges faced by businesses in Russia when conducting international transactions.
These difficulties were intensified by the recent US sanctions that restricted foreign banks from dealing with Russia, following the country’s actions against Ukraine.
Transacting with digital assets will enable Russia to bypass traditional financial systems like SWIFT, which can be easily controlled by the US sanctions.
A Significant Shift From Crypto Ban
This step also reflects a significant shift from Russia’s initial crypto stance. Russia’s Central Bank outrightly banned cryptocurrencies in the country in January 2022.
However, a bill was approved by Russian lawmakers on July 30 that would permit business owners to use digital assets for international trade.
The bill was included in the regulations for crypto mining while the country still maintains its current ban on crypto payments.
On August 8, these regulations became effective within Russia after President Putin signed the bill.
On August 14, 2024, Anton Siluanov, Russia’s Finance Minister, stated during a forum that the Russian government is now looking for effective ways to legalize cryptocurrencies and exchanges. He added that they,
Haven’t found a solution yet on how to do this.
What Implications Does This Move Have?
If the upcoming trial becomes successful, it could lead to the launch of the Moscow and St. Petersburg crypto exchanges for stablecoin in the country and these three implications are certain:
Economic implication: Drifting towards crypto provides a sure alternative to the USD and EUR in trade settlements. This may subsequently stabilize the country’s economy by boosting trade with other countries that are willing to transact with crypto
Geopolitical implication: Other countries facing sanctions or economic isolation may be encouraged to explore digital assets as an option. This may eventually lead to a broader shift in global trade.
Regulatory implication: This move possibly poses regulatory risks to cryptocurrencies.
