According to Bloomberg, Russia is poised to initiate trials involving crypto exchanges and the utilization of digital tokens for cross-border transactions in a bid to avoid international sanctions.
This is scheduled to begin on September 1, according to sources familiar with the matter who told Bloomberg that this signifies a leap towards alleviating payment hurdles faced by domestic companies amid the ongoing economic constraints inflicted by sanctions.
Russia’s Crypto Pivot Amid Sanctions
Sources requesting anonymity due to the sensitive nature of the information disclosed that Russia intends to leverage its National Payment Card System to facilitate the seamless exchange between rubles and crypto assets during the trial phase of payment systems and the exchange platform.
The legislative groundwork for the initiative was laid in July when Russia’s parliament passed bills that not only legalized crypto mining but also established a framework enabling the supervised testing of digital tokens for cross-border payments under the watchful eye of the central bank.
Bitcoinist reported that the official imprimatur was affixed on August 8 by President Vladimir Putin, endorsing the bills into law.
This foray into the crypto sector comes at a critical juncture for Russian businesses grappling with mounting obstacles in settling payments with overseas suppliers and receiving remittances for exported goods.
These challenges have been exacerbated by a pivotal US decision in June, which broadened the criteria for determining the imposition of sanctions on foreign financial institutions engaged with Russia.
Interestingly, the central bank had, until as recent as January 2022 and shortly before Russia’s military intervention in Ukraine, proposed an outright ban on the utilization and creation of cryptocurrencies.
However, the winds of change have swept through the regulatory landscape, with Finance Minister Anton Siluanov disclosing on August 14 at a forum that authorities are actively exploring avenues to legalize crypto exchanges. Siluanov admitted the absence of a definitive solution on the modus operandi for this transformation.
National Payment Card System Key Player In Trials
The selection of the National Payment Card System, established by the central bank in 2014 and currently overseeing Mir cards and Russian instant interbank payment systems, as the conduit for these crypto-exchange trials is reportedly significant.
According to Bloomberg, the system’s pre-existing infrastructure for critical functions like interbank settlement and clearing, coupled with its regulatory oversight by the central bank, positions it as an ideal vehicle for this pivotal experiment.
Notably, the press representatives of the Finance Ministry, central bank, and National Payment Card System remained silent in response to requests for comments on this development.
Should the trials prove successful, insiders hint that the Moscow Exchange and the St. Petersburg Currency Exchange may be granted the green light to establish crypto platforms in the upcoming year.
Featured image from DALL-E, chart from TradingView.com