Russia Passes Bill Allowing Businesses To Use Crypto In International Trade

Russian lawmakers  passed a bill permitting businesses to use crypto in international trade in a bid to mitigate the impact of Western sanctions.

This legislation is expected to take effect in September, according to a Reuters report. The bill aims to circumvent the financial restrictions imposed following Russia’s invasion of Ukraine. 

Central Bank Governor Elvira Nabiullina, a key proponent of the new law, said that the first cryptocurrency transactions under this framework is anticipated by the end of the year. The central bank will establish a new “experimental” infrastructure for these transactions. 

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Payment Delays Become A Challenge For Russia

Delays in international payments, particularly with major trading partners such as China, India, and the UAE, have become a  challenge. These delays are attributed to increased caution among banks in these countries, driven by pressure from Western regulators.

The central bank highlighted that payment delays have severely impacted the Russian economy, contributing to an 8% decline in imports during the second quarter of 2024.

“We are taking a historic decision in the financial sphere,” Anatoly Aksakov, head of the Duma’s lower house of parliament, said.

🔔 #Russia Considers Legalizing #Crypto for International Payments !

Russia is set to legalize #cryptocurrency for international payments amid Western sanctions. The State Duma will review a law allowing crypto settlements, with approval expected soon. Russia's central bank aims… pic.twitter.com/zE93a6ueC9

— Altcoin Alerts (@Altcoin_Alerts) July 30, 2024

The bill is part of a broader legislative package that includes regulations on crypto mining and the circulation of other digital assets. However, it does not lift the existing ban on cryptocurrency payments within Russia.

Russia is actively trying to switch to partner currencies and develop an alternative payment system within the BRICS group. However, many transactions are still conducted in dollars and euros through the international SWIFT system.

This dependence exposes banks in countries trading with Russia to the risk of secondary sanctions, which complicate import payments and affect a wide range of goods. These challenges have led to longer supply chains and increased costs.

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Russian Commodities Firms Turn To Stablecoins For Transactions

Russian commodities firms have increasingly turned to stablecoins to facilitate transactions with Chinese counterparts. 

Bloomberg reported that crypto, including Tether’s stablecoin, is being used to navigate international restrictions.

The use of cryptocurrencies for payments is not unique to Russian firms.

Countries under sanctions, like Venezuela, have also turned to Tether for conducting transactions, often at significant discounts, with intermediaries based in Dubai facilitating these deals.

Furthermore, Russia is advancing its Central Bank Digital Currency (CBDC) plans. Last July, President Vladimir Putin signed a bill introducing a digital version of the national currency. This legislation authorizes the Bank of Russia to operate the digital ruble platform, which will function alongside cash and non-cash rubles.

Moreover, Russia and Iran are collaborating on CBDC and “digital financial asset” (DFA)-powered trade solutions. These initiatives reflect a broader strategy to enhance financial resilience and maintain trade flows amidst ongoing geopolitical challenges.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

Disclaimer

Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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