Key Points:
- Russia’s lower house of parliament has approved a law allowing international payments using cryptocurrencies.
- The central bank aims to implement cross-border crypto transactions by the end of 2024, as stated by Governor Elvira Nabiullina.
- This decision comes as Russia faces numerous sanctions from the U.S. and its allies in response to its actions in Ukraine.
Details:
The Russian State Duma, the lower house of the country’s parliament, has passed a new law permitting businesses to use cryptocurrencies for cross-border trade. This legislation is a significant step as Russia looks for alternative financial solutions under the pressure of Western sanctions.
Anatoly Aksakov, the head of the Duma, called the decision historic in the financial sphere. The move aligns with Russia’s need to adapt to the increasing use of digital currencies in global commerce, as traditional channels are restricted due to sanctions.
Mati Greenspan, CEO of Quantum Economics, pointed out that cryptocurrencies like Bitcoin offer a way for Russia to conduct transactions without fear of being blocked or censored by governments or banks. This is a shift from Russia’s previous reluctance to allow such financial freedoms.
Bitcoin’s value has more than doubled in the past year, reaching around $66,000, partly due to the optimism surrounding the approval of the first U.S. spot Bitcoin exchange-traded funds and the upcoming halving event, which will reduce the supply of new tokens.
Sanctions and Their Impact:
Russia faces ongoing sanctions from the U.S., European Union, and Britain, particularly following its February 2022 invasion of Ukraine. These sanctions have targeted various aspects of the Russian state, including President Vladimir Putin, the financial sector, and several oligarchs.
In response, Russia’s central bank has been authorized to use cryptocurrencies for international transactions. Governor Elvira Nabiullina mentioned that crypto-based payments are expected to start before the end of 2024. This marks a change from the central bank’s earlier stance in January 2022, when it proposed banning crypto transactions and mining due to concerns about financial stability and sovereignty.
Russia is also exploring the development of a digital version of the ruble. The central bank plans to move from the pilot phase to a broader implementation of the digital ruble by July 2025.
Cryptocurrencies and Sanctions Evasion:
Accepting cryptocurrencies is seen as a strategic move for Russia to facilitate international trade despite sanctions. Other sanctioned countries, like North Korea and Iran, have used cryptocurrencies to circumvent financial restrictions. North Korea, for example, has been linked to cyberattacks that have stolen large sums of digital currency, such as the $600 million hack of the Ronin Network.
Proponents of cryptocurrencies argue that these digital assets can help counter illicit activities because blockchain technology provides a transparent and secure record of all transactions.
