On Tuesday, Russian lawmakers approved a groundbreaking bill allowing businesses to use cryptocurrencies for international transactions. This move is part of Russia’s strategy to navigate Western sanctions imposed following its invasion of Ukraine. The new law, which will come into effect in September, is expected to facilitate cryptocurrency transactions by the end of the year, according to Russian central bank Governor Elvira Nabiullina.
The legislation addresses significant delays in international payments with major trading partners such as China, India, and the UAE. Banks in these countries, pressured by Western regulators, have become more cautious, impacting Russia’s ability to conduct trade efficiently. Anatoly Aksakov, head of the Duma lower house of parliament, described the legislation as a historic financial decision.
Under the new law, the central bank will develop an “experimental” infrastructure for cryptocurrency payments, although detailed plans are yet to be announced. The law is part of a broader package that includes regulations on cryptocurrency mining and the circulation of digital assets, but it does not lift the existing ban on cryptocurrency payments within Russia.
The central bank reported that payment delays have become a major challenge for the Russian economy, contributing to an 8% decline in imports in the second quarter of 2024. Despite attempts to use alternative currencies and develop new payment systems within the BRICS group, many transactions still rely on dollars, euros, and the international SWIFT system, increasing the risk of secondary sanctions. Nabiullina emphasized that these risks complicate payments, extend supply chains, and raise costs.
Credit: Reuters (Text Excluding Headline)
