Russia Allows Digital Asset Payments for International Transactions: Can Vladimir Putin Beat Sanctions?

This result marks the highest in Russia’s post-Soviet history, underscoring Putin’s dominant hold on power. Putin interpreted the overwhelming win as validation of Russia’s stance against the West and its military actions in Ukraine. International observers from the United States, Germany, the United Kingdom, and other countries, have, however, questioned the election’s legitimacy, citing the lack of freedom and fairness due to political repression and media censorship.

Key Takeaways

• Russia legalizes digital assets for international trade.
• Putin said the Central Bank of Russia will be charged for regulating all digital transactions
• This move is aimed at sidestepping sanctions.

Russia has officially incorporated digital assets into its payment systems for international transactions through new legislation.

Reelected president Vladimir Putin has enacted a law that sanctions the use of digital assets for international settlements. This move addresses a gap in the law. Meanwhile, Putin designated the Central Bank of Russia to supervise these operations.

Russia Advances Digital Asset Legislation: Putin Signs New Laws

Recently, Russia broadened its financial legislation to include further applications for digital assets. Putin enacted amendments that allow the use of digital assets in international transactions, marking an approach not previously covered by law.

This newly signed legislation assigns the Central Bank of Russia the authority to regulate these transactions, granting it the power to impose specific conditions and prohibitions. Additionally, the law encompasses transactions involving digital asset exchanges between residents and non-residents, as well as between two non-residents.

Local reports suggest that Russia’s latest legislative moves to integrate digital assets into its financial system aim to tackle existing and potential payment difficulties stemming from international economic sanctions.

Although Russia had previously considered digital assets as a means to facilitate payments unaffected by these sanctions, there was no formal regulation in place to support such use. The recent laws mark a strategic effort to formalize the role of digital assets in circumventing financial barriers.

New Law Follows Calls for BRICS Blockchain-Based Payment System

The enactment of Russia’s digital asset law aligns with previous statements from Russian officials advocating the use of blockchain technology and Central Bank Digital Currencies (CBDCs) as the foundation for a payment system within the BRICS bloc. Led by Russia and including Brazil, India, China, South Africa, along with new members Saudi Arabia, the United Arab Emirates (UAE), Iran, Egypt, and Ethiopia, the group aims to establish a cost-efficient and politically neutral payment alternative utilizing these digital assets.

Notably, Russia and China, two leading economies in the bloc, are at the forefront of CBDC experimentation. Russia is advancing with its digital ruble pilot, while China has already introduced the digital yuan into circulation.

Putin Wins Record Election, Eyes West

In Russia’s recent election, President Vladimir Putin achieved a landmark victory , securing around 87.8% of the vote.

This result marks the highest in Russia’s post-Soviet history, underscoring Putin’s dominant hold on power. Putin interpreted the overwhelming win as validation of Russia’s stance against the West and its military actions in Ukraine. International observers from the United States, Germany, the United Kingdom, and other countries, have, however, questioned the election’s legitimacy, citing the lack of freedom and fairness due to political repression and media censorship.