In a surprising move, the Russian Central Bank is considering the use of cryptocurrencies for international settlements. This marks a significant shift for a country that has been under heavy international sanctions since the start of its invasion of Ukraine. Despite its previous opposition to cryptocurrencies, the Central Bank appears to be more open to their use in this particular context.
Cross-border crypto transactions would be inevitable, claimed the Russian central bank in September 2022 , given the geopolitical environment that exists once the conflict in Ukraine begun. Russian legislators have long opposed the idea of accepting cryptocurrencies as payment. In 2020, Russia enacted a key crypto policy titled “On Digital Financial Assets” that forbade the use of cryptocurrencies like Bitcoin (BTC) as payment methods. The Bank of Russia has been wary of things like cryptocurrency payments because the Russian ruble is the only legal tender in the country.
According to local media reports, the head of the Central Bank spoke about this possibility at an event with representatives of the New People party. He stated, “For external payments, we assume that this is possible in the form of an experiment, this bill is also being prepared in the form of an experimental legal regime.”
This use of cryptocurrencies for international settlements will be part of a broader experiment in regulatory frameworks. Russia has been working on regulations for cryptocurrencies, with some updates released in recent months. From Q2 2023, the country will allow cryptocurrency exchanges to operate legally, with a particular focus on stablecoins.
Despite the government’s previous attempts to curb the crypto market, adoption appears to be on the rise in Russia. Some reports suggest that Russia is even using crypto assets to bypass the sanctions imposed on the country.
The Central Bank’s change of heart regarding cryptocurrencies likely stems from the severe economic impact of sanctions. As such, it’s not surprising that other countries facing sanctions may also look towards cryptocurrencies as an alternative means of conducting international transactions.
The potential use of cryptocurrencies for international settlements raises interesting questions for the future of the crypto sector. If more countries adopt this approach, it could lead to greater adoption and acceptance of cryptocurrencies on a global scale. However, it’s worth noting that such a move could also lead to greater regulation and oversight of the sector, as governments seek to prevent illicit use of cryptocurrencies.
It highlights the potential of cryptocurrencies to serve as an alternative to traditional financial systems, especially for countries facing economic sanctions. As more countries consider similar approaches, it will be interesting to see how this impacts the future of the crypto sector as a whole.