Illustrative image of two commemorative Bitcoins in front of a Russian flag displayed on a computer screen.
Artur Vidak | Noor Photos | Getty Images
Russian lawmakers on Tuesday approved a new law allowing the use of cryptocurrencies for international payments, as the country faces continued financial pressure from Western sanctions.
The State Duma, Russia’s lower house of parliament, gave preliminary approval to new legislation on Tuesday that would allow businesses to use cryptocurrencies for cross-border trade, according to local media reports.
“We are taking a historic decision in the financial sphere,” Duma Chairman Anatoly Aksakov told lawmakers on Tuesday, Reuters reported.
Mati Greenspan, CEO of cryptocurrency market research firm Quantum Economics, said Russia’s enthusiasm for cryptocurrencies is justified because Bitcoin transactions “cannot be censored or blocked by any government or bank.”
“Previously, Russia did not want to allow its citizens this freedom of transaction, but now Bitcoin is used so frequently in daily commerce that the opportunity cost of them not allowing this transaction is simply too great,” he added.
Bitcoin price has more than doubled over the past year on optimism over first U.S. spot approval Bitcoin ——And, recently, ether — exchange traded funds,as well as The so-called halving event This reduces the supply of newly issued tokens.
The world’s largest digital currency is currently worth $66,000, up more than 120% in the past 12 months, according to CoinGecko.
under pressure from sanctions
Growing tensions between Russia and the United States and its allies have led Russia to impose numerous sanctions on individuals and entities in retaliation for its attacks on Ukraine.
After Russia invaded Ukraine in February 2022, the United States, the European Union and the United Kingdom imposed sanctions on Russia. They continue to increase pressure on the country, targeting President Vladimir Putin, the Russian financial sector and numerous oligarchs.
In addition to passing legislation to allow Russian companies to conduct international transactions through cryptocurrencies, the Russian central bank will also receive permission to use private digital currencies to transfer funds overseas.
Cryptocurrency-based payments will begin before the end of 2024, Russia’s central bank governor Elvira Nabiullina said on Tuesday.
“We are already discussing the terms of the trial with ministries and businesses and we expect the first payments to be made before the end of the year,” she said.
The central bank’s commitment to using cryptocurrencies as a method of cross-border payments marks a reversal from the regulator’s previous stance on the technology.
In January 2022, the Central Bank of Russia Proposed ban on trading in cryptocurrenciesand the mining of digital currencies, citing threats to financial stability, citizen well-being, and monetary policy sovereignty.
In addition, Russia is also exploring the implementation of a digital version of the ruble. Central bank governor Nabiullina said on Tuesday that regulators will seek to move from a pilot phase to large-scale implementation of the digital ruble from July 2025, according to Russian news agency Interfax.
Central bank digital currencies (CBDC) are not the same as cryptocurrencies. unlike Bitcoin Like other cryptocurrencies that are not managed by a central authority, CBDC is issued directly by governments and is designed to replicate fiat currency in the form of digital tokens.
Can cryptocurrencies help countries evade sanctions?
Quantum Economics’ Greenspan said Russia’s move to accept cryptocurrencies “makes perfect sense from a global trade perspective.”
He added that this would “help Russia open up cross-border payments with countries and businesses that have been closed to Russia due to U.S. sanctions.”
Other sanctioned countries often try to circumvent such financial restrictions through the use of cryptocurrencies. North Korea, for example, has repeatedly been accused of raising millions of dollars in cryptocurrency to help fund various state programs and evade foreign sanctions.
North Korean state-backed hacker group Lazarus is behind a massive heist Ronin Network — A blockchain that supports the popular non-fungible token (NFT) game Axie Infinity. Blockchain analysis companies Elliptic and Chainaanalysis have previously stated that the hack resulted in cybercriminals stealing more than $600 million worth of digital tokens.
Iran has also been blamed Using digital currency to bypass international trade barriers.
On the other hand, cryptocurrency proponents also claim that digital assets are useful tools in combating illegal activities. This is because the network that underpins them (called a blockchain) is public and displays a cryptographically secure and unchangeable history of transactions.
