Russia’s central bank has announced plans to establish new institutions to mine crypto assets and settle international payments, with the creation of “special authorized organizations”. The Bank of Russia is also launching a pilot program to allow the use of cryptocurrency in external settlements, according to the head of the central bank, Elvira Nabiullina. However, Nabiullina emphasized that the move does not indicate any change in Russia’s position on cryptocurrency within the country.
The plan will include the creation of new entities to engage in crypto mining and international settlements, with discussions underway between the bank and the government to clarify the scope of activity for these companies. Gabby Kusz, CEO of the Global Digital Asset & Cryptocurrency Association, highlighted that this is a positive development, showing that Russia and other countries are recognizing that “crypto is not a new financial product, but an evolution or fundamental change in the way individuals and organizations exchange value”.
This development comes as BRICS countries work on creating their own currency for facilitating trade, while commodities-backed currencies used for settlements are not intended to replace the US dollar dominance. Mark Lurie, CEO of DeFi software company Shipyard, said that neither investors nor the BRICS themselves will necessarily trust a Russia-led governing body of such a currency not to devalue itself.
This move by the Bank of Russia is expected to have significant implications for the crypto sector. The acceptance of a cryptocurrency for external settlements could encourage other countries to follow suit, potentially accelerating the mainstream adoption of cryptocurrencies. It could also attract more investors to the crypto sector, increasing its market capitalization and expanding its use cases. However, as with any experimental legal regime, there are risks involved, such as regulatory uncertainties, market volatility, and potential cyberattacks.
Despite these challenges, the move by the Bank of Russia is a positive development for the crypto sector and the metaverse. It signals a shift in mindset among central banks and governments, acknowledging the potential of blockchain technology and cryptocurrencies in facilitating international trade and promoting financial inclusion. As more countries explore the use of cryptocurrencies for settlements, the global financial system is likely to become more decentralized and diversified, with implications for monetary policy, economic growth, and geopolitical power.
