Russia plans to allow crypto transactions

In the face of Western sanctions that prevent Russians from receiving payments from abroad and even buying goods from international websites, a government official said there were “active discussions” about the use of crypto assets.

Important changes to support a war economy

As Putin’s government explores all alternatives to mitigate the impact of the sanctions – such as blocking Swift transfer messaging at the country’s most popular bank – the latest solution found is unprecedented.

For international transactions, the Kremlin plans to allow payments in cryptocurrencies, assets that are traded on a blockchain and not controlled by a central authority.

“The idea of ​​using digital currencies in transactions for international settlements is actively being discussed,” Ivan Chebeskov, head of the finance ministry’s financial policy department, told Russian news agency Interfax.

In other words, Russian consumers who have a crypto-asset wallet on an online platform or on a USB stick (ledger) can use it to circumvent the ban from another account holder. crypto.

He added that allowing cryptocurrencies as a means of settlement in international trade would help thwart the impact of Western sanctions, which have left Russia with “limited” access to traditional cross-border payment methods.

“The proposed changes aim to create a legal market for digital currencies with the establishment of rules for their circulation and the circle of authorized participants,” the ministry said in a statement in February.

Citing government officials, the Vedomosti newspaper reported on Friday that the Treasury Department was discussing adding the latest proposal on international payments to an updated version of the bill.

A double challenge for Russia

For Moscow, the challenge is twofold. One is to support the rouble, a national currency that can no longer rely on foreign exchange reserves frozen by the Russian central bank. Indeed, if the ruble depreciates too much, prices – already affected by high inflation after the stoppage of foreign imports – will only increase for Russians.

In the face of an already dizzying economic recession, this was enough to erode popular support for Vladimir Putin’s regime and policies. Lower central bank interest rates only support this war economy.

One of the proposed changes is the use of cryptocurrencies as a means of payment for “foreign trade activities of legal entities and individual entrepreneurs”.

“By using in particular the identifier provided by the operator of the digital commercial platform, it will be possible to pay for goods, works, services, intellectual activities (…) the source traces the essentials of the innovation”, reports the newspaper.

Another interest in the authoritarian regime for cryptocurrencies is participation in reducing reliance on the US dollar for international trade.

In this sense, the central bank is already experimenting with a digital ruble, a centralized digital currency (MNBC), to create a new monetary order within it and with new partners, starting with China already at the forefront of electronic money with his Yuan.

But Russian officials clearly want to go further than the plan of the central bank, which opted for a crypto ban in favor of its MNBC, and allow the cryptocurrency market more broadly while regulating it.

Another proposal is to require cryptocurrency trading platforms to cooperate with regulators regarding “retaining information about owners of digital currencies and transactions with them in Russia for three years.”

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Russia plans to allow crypto transactions

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