Russian Regulators Soften Stance On Crypto. Are stablecoins the solution to Russia’s sanctions?

Russia seeks to circumvent the economic restrictions imposed on it with the use of cryptocurrencies. 

According to local media reports published on 3 July 2024, the Russian government is contemplating legalizing stablecoins for international transactions to simplify cross-border payments.

After the use of economic sanctions on Russia as a tool of foreign policy, the government and financial regulators are exploring ways to mitigate the impact of these sanctions. Crypto tops the list of solutions for the country. 

Crypto operates on decentralized networks and offers a level of anonymity and security that traditional financial systems do not. For Russia, crypto is an attractive option. 

Russia Softens Stance On Crypto 

According to a Euractiv report published on 4 July 2024, Elvira Nabiullina, governor of the central bank explained why Russia softened its stance on crypto. She said, “New financial technology creates opportunities for schemes which did not exist before. This is why we softened our stance on the use of cryptocurrencies in international payments, allowing the use of digital assets in such payments.” 

“Different alternatives are being discussed. Businesses have become very flexible, very enterprising. They find ways to solve this and often don’t even share them with us,” Nabiullina added.

The report highlights the government’s perspective towards crypto and how it can be used as a viable tool to facilitate international trade.

Will Russia Legalize Stablecoins For Cross-Border Payments?

 Less volatile crypto assets that are tethered to stable assets or currencies like the US dollar or gold, are being actively discussed by the Central Bank of the Russian Federation (CBR).

Russia is considering legalizing stablecoins for international transactions to simplify cross-border payments for its companies.

The Russian Central Bank is discussing proposals to allow stablecoins pegged to gold or the US dollar.#TradeCoinD2 #TradeCoin pic.twitter.com/j15q36pDhX

— CryptoNewsD2 (@CryptoNewsD2) July 4, 2024

The plan was verified by Alexey Guznov, Deputy Chairman of the CBR. He noted that the main goal is to regulate the whole transaction chain, from the transfer of these assets into Russia to their accumulation and use in cross-border payments.

Instead of seeing this as a pilot program, Guznov suggested it could become permanent regulation. He said that although stablecoins are similar to cryptocurrencies and digital financial assets (DFAs), their distinctive features make it imperative to fine-tune the legal environment.

The research claims that stablecoins are a potential solution for global settlements, particularly for deals involving the BRICS nations (South Africa, Russia, India, and China).

International Reactions

The international community has been closely monitoring Russia’s move, because there are concerns that the use of cryptocurrencies could undermine the effectiveness of sanctions. 

Western nations, particularly those that have imposed sanctions on Russia, are wary of this development.

Read more: 10 Best No KYC Crypto Exchanges for 2024 

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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