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Russian lawmakers approved a new law on Tuesday allowing the use of cryptocurrency for international payments. This move comes as Russia faces continued financial pressure from Western sanctions.
The State Duma, Russia’s lower house of Parliament, has given initial approval to the legislation, which permits businesses to use cryptocurrencies for cross-border trade. Anatoly Aksakov, head of the Duma, described the decision as “historic” for the country’s financial sector.
Mati Greenspan, CEO of Quantum Economics, commented on the development, noting that Russia’s shift towards crypto aligns with the increasing global use of digital currencies. He explained that bitcoin transactions are immune to censorship by governments or banks, making it a strategic choice for Russia amid its current financial isolation.
Bitcoin’s value has surged over the past year, currently standing at $66,000, driven by positive developments like the approval of U.S. spot bitcoin ETFs and a recent halving event.
Sanctions Pressure
Western sanctions have intensified against Russia following its invasion of Ukraine in February 2022. These sanctions target various sectors, including financial institutions and key individuals, as part of broader efforts by the U.S., EU, and Britain to apply pressure on the Russian government.
In addition to allowing international transactions in cryptocurrency, the new law also authorizes the Russian central bank to use digital currencies for overseas transactions. Central Bank Governor Elvira Nabiullina stated that such crypto-based payments are expected to begin by the end of 2024.
This marks a notable policy shift for the central bank, which had previously proposed banning cryptocurrencies due to concerns over financial stability and monetary policy.
Digital Ruble and Crypto Adoption
Russia is also working on implementing a digital version of the ruble. Nabiullina announced that the central bank plans to transition from the pilot phase to a broader rollout of the digital ruble by July 2025. Unlike cryptocurrencies, central bank digital currencies (CBDCs) are government-issued and designed to mimic traditional fiat currencies.
Global Trade and Sanction Evasion
Greenspan argued that Russia’s acceptance of cryptocurrency is a strategic move to facilitate international trade and circumvent U.S. sanctions. Other countries under sanctions, such as North Korea and Iran, have used digital currencies to bypass financial restrictions and facilitate international transactions.
Despite these concerns, proponents of cryptocurrencies highlight their potential for enhancing transparency and countering illicit activities. Blockchain technology provides a public, immutable record of transactions, which can be useful for maintaining financial integrity.
As Russia navigates its financial isolation, the adoption of cryptocurrency and development of a digital ruble could play crucial roles in its economic strategy.