In a landmark move aimed at circumventing Western sanctions, Russian lawmakers have approved a bill enabling businesses to use cryptocurrencies in international trade.
This new legislation, set to be enacted in September, is poised to transform the way Russia conducts global transactions, particularly with key trading partners such as China, India, and the United Arab Emirates.
The adoption of this bill is seen as a strategic response to the increasing delays and complications in international payments. These challenges have arisen due to heightened scrutiny from Western regulators, which has prompted banks in several countries to adopt more cautious approaches when dealing with Russian transactions.
Elvira Nabiullina, the Governor of Russia’s central bank and a proponent of the new law, announced that the first cryptocurrency transactions are expected to be completed by the end of the year. This development is part of a broader initiative to establish an “experimental” infrastructure for cryptocurrency payments, the details of which are yet to be disclosed.
The legislation also includes measures regulating the mining and circulation of digital assets. However, it maintains the current prohibition on the use of cryptocurrencies for domestic payments within Russia.
The move to embrace cryptocurrencies is intended to mitigate the economic impact of sanctions, which have led to an 8% decline in Russian imports during the second quarter of 2024. Despite efforts to transition to partner currencies and develop an alternative payment system within the BRICS group, many transactions still rely on dollars and euros via the SWIFT system, exposing banks to the risk of secondary sanctions.
Nabiullina highlighted that these secondary sanctions have complicated payment processes for a wide range of goods, resulting in longer supply chains and increased costs. The introduction of cryptocurrency payments is expected to alleviate some of these pressures, providing a more resilient and flexible framework for international trade.
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