Russia is preparing to initiate trials for crypto exchanges and the use of digital tokens in cross-border payments, with the trials scheduled to begin on Sept. 1, 2024, according to Bloomberg. The trials are intended to help Russian businesses overcome payment challenges caused by international sanctions.
The trials will utilize the National Payment Card System to enable the conversion between crypto and rubles, as well as evaluate exchange and payment platforms. The Russian central bank set up the system in 2014, and it presently controls the Mir card network and monitors domestic interbank transfers.
Before now, the central bank has supported a complete prohibition on crypto activities, citing worries about potential illicit activity and financial stability. However, the government’s stance has shifted, now viewing digital currencies as a means to alleviate the pressure of sanctions.
The Russian parliament enacted a measure in July that will allow cryptocurrency mining and provide a framework for testing digital tokens for international payments under the supervision of the central bank. Last month, Russian president Vladimir Putin signed the legislation into law.
The exploration of cryptocurrency substitutes comes at a crucial moment with Russian companies encountering growing challenges in handling payments for global transactions as a result of the United States’ tightening sanctions.
Earlier this year, in June, the U.S. intensified sanctions on foreign financial institutions that maintain close ties with Russia, exacerbating the difficulties Russian businesses face in making payments.
The dependence on the U.S. dollar has placed many of these institutions at the risk of secondary sanctions, leading to severed relationships with Russian businesses. For instance, the majority of Chinese banks have stopped transacting in yuan with Russian companies, even though the Chinese yuan is vital to Russia’s economy.
According to Tass news agency, Anton Siluanov, Russia’s finance minister, recently stated that the government is looking into legalizing cryptocurrency exchanges, but no firm decision has been made yet.
If the trials succeed, Russia may authorize the St. Petersburg Currency Exchange and Moscow Exchange to launch crypto trading platforms as early as next year. Sources indicate that any existing crypto could be utilized in the trials.
The trials are part of a larger BRICS attempt to “dedollarize” its international trade by reducing its reliance on the US dollar. The BRICS coalition has been aggressively exploring crypto use and other alternative payment methods as a way to protect their economies from the impact of U.S. financial policy.
Established players in the crypto industry, such as Riot Blockchain Inc. (NASDAQ: RIOT), could follow the developments in Russia to establish whether viable market opportunities could open up for them sometime down the road.
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