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Russia Moves to Regulate Stablecoins for Trade, Eyes Crypto to Mitigate Sanctions Impact

Last Updated July 5, 2024 12:34 PM
Teuta Franjkovic
Last Updated July 5, 2024 12:34 PM

Key Takeaways

  • Russia is actively exploring using stablecoins for international trade settlements. 
  • Both the Ministry of Finance and the Bank of Russia are working together to legalize stablecoin use potentially. 
  • Stablecoins offer an alternative payment system that might be less susceptible to Western sanctions, making them attractive for international trade.

Russia is actively exploring the integration of stablecoins into its financial system for cross-border payments. 

Alexey Guznov, Deputy Chairman of the Bank of Russia, announced  that proposals have been submitted and are currently under discussion. 

Russia Considers Stablecoins for International Trade Settlements

The Ministry of Finance has confirmed its involvement in developing this initiative, indicating a collaborative effort to legislate the use of stablecoins in upcoming bills. This move could officially authorize stablecoins for international transactions, aligning with global trends in digital currency adoption.

While the potential for their approval as a legitimate tool for cross-border transactions is promising, Guznov also noted that there are several technical issues that need addressing. These include the regulation of processes that would allow individuals and companies to receive, store, and use these digital currencies for international payments, ensuring a secure and efficient financial environment.

According to  Guznov:

“Understanding is still evolving, and I hope that it will soon be reflected in the text of the bill.”

Advancing Stablecoin Use for Permanent Cross-Border Settlements

The press service of the Ministry of Finance confirmed to Izvestia that Russia is actively working on enabling the use of stablecoins for cross-border settlements, potentially on a permanent basis following the precedent set by the approval  of the digital financial assets (DFA) law in March.

Various influential Russian figures have expressed support for the use of stablecoins—tokens tied to the value of other assets or fiat currencies, predominantly the US dollar. 

Alexander Murychev, executive vice president of the Russian Union of Industrialists and Entrepreneurs, has described  stablecoins as “very promising” for cross-border financial transactions. According to him, engaging these backed assets will introduce a greater volume of liquidity into the market and help establish a long-term resource.

Leveraging Stablecoins to Sidestep Western Sanctions

Natalia Milchakova, a leading analyst at Freedom Finance Global, stressed  that stablecoin transactions are difficult for third-country regulators to track, making them appealing for countries wishing to conduct payments without the threat of Western sanctions.

Currently, these types of payments are being executed on a small scale. For instance, in June, reports surfaced  that two leading Russian metal producers were using Tether’s USDT stablecoin for transactions with Chinese partners.

Recently, Russia’s central bank has recommended that national businesses explore various payment solutions, including cryptocurrencies and digital assets, to manage transactions with foreign partners in response to Western sanctions. 

Governor Elvira Nabiullina highlighted  the Bank of Russia’s increasingly lenient stance on using cryptocurrencies for international payments. She also discussed ongoing efforts to establish alternative global payment systems, such as the BRICS Bridge, aimed at enhancing Russia’s financial autonomy on the global stage.

 

The Bank of Russia has advised businesses to adopt “multiple choice solutions,” including cryptocurrencies and other digital assets, to manage payments with foreign partners and mitigate the impact of Western sanctions following the Ukraine conflict.

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