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Russia will commence a trial of using cryptocurrency for cross-border payments next week, as a means to work around international sanctions.
Legislation was passed at the end of July and then signed off by President Vladimir Putin to allow international payments using the digital currency, but there will be no change within Russia. Crypto can still not be used as legal tender for regular, domestic transactions.
The plan seeks to mitigate the damaging sanctions inflicted on Russia, following the invasion of Ukraine in February 2022. Led by the United States, the United Kingdom, the European Union, as well as Australia, Canada, and Japan, more than 16,500 sanctions have been enforced, with a considerable impact on the Russian economy.
Around half of Russia’s total foreign currency reserves, with a value of around $332 billion, including up to 70% of the assets of the Russian banking system, are said to be frozen. Certain Russian banking entities have also been removed from the SWIFT platform, the international bank message system.
Reports of state-run crypto trading platform in Russia
Policy experts stated on Friday (Aug, 31) that attempts to work around international sanctions using crypto are not guaranteed to be successful, reported Coindesk.
“It has been difficult for Russia to avoid the U.S. dollar and euro via the SWIFT system, which has created an increasing risk of secondary sanctions,” said Valerie Kennedy, director of investigations at blockchain analytics company, Chainalysis.
Secondary sanctions are in place to act as a deterrent to stop third parties from trading with a sanctioned country.
The imminent experiment for cross-border payments, giving leeway to the Russian central bank, comes as the Russian Stock Exchange dismissed reports alleging it is preparing to launch a state-run crypto trading platform.
The main Moscow and St. Petersburg exchanges insisted they are focused on their primary money and stock markets, but out in the regions, the Republic of Tatarstan has positioned itself for the opportunity. A platform for a national crypto exchange is said to be ready and waiting, backed by the relevant local authorities.
Image credit: Via Ideogram
