Russia will begin testing cross-border cryptocurrency payments next week, following new legislation signed by President Vladimir Putin in July.
The law permits these payments while maintaining a ban on using cryptocurrencies as regular legal tender within Russia. However, the law does not clearly outline rules for these transactions, giving Russia’s central bank authority to oversee an “experimental” regulatory framework.
The law is set to take effect in September, with central bank Governor Elvira Nabiullina, a key supporter of the legislation, indicating that the first cryptocurrency transactions are expected by year-end.
She also noted that Russia’s business partners in various countries are under “tremendous pressure,” and predicted that a new global payments system independent of Western institutions would eventually emerge.
The move is part of Russia’s strategy to circumvent international sanctions imposed after its invasion of Ukraine in February 2022. Since then, Russia has faced 16,500 sanctions from countries including the U.S., U.K., European Union, Australia, Canada, and Japan.
The law’s details, especially on the practical execution of crypto payments, remain vague. It grants the central bank control over the experimental regime but does not specify the rules for cross-border transactions.
According to Bloomberg, Russia plans to use its National Payment Card System for converting rubles into cryptocurrencies during the trial. If the trial succeeds, crypto platforms could be established at the Moscow and St. Petersburg exchanges next year.
Experts suggest that the framework’s exact parameters are still unclear, and the central bank may change its approach as needed. The central bank will publish guidance soon, determining which companies can participate in the experiment.
The law’s intent is to use cryptocurrencies to counteract sanctions, as confirmed by statements from senior Russian leaders, including President Putin. However, the implementation remains uncertain due to the central bank’s extensive authority over the process.
If Russia succeeds in bypassing sanctions through crypto payments, it could prompt stricter enforcement or new sanctions from the West. Secondary sanctions, which aim to prevent third parties from trading with sanctioned countries, are one growing threat.
Despite these challenges, experts question whether foreign partners will engage in such transactions, citing concerns over liquidity and price crashes in crypto markets.
Russia suffers massive delays in payments with major trading partners such as China, India, and the United Arab Emirates as banks in these countries, under Western regulatory pressure, exercise increased caution.
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