Russia is preparing to start trials of cross-border cryptocurrency transactions and exchanges, according to a report Monday from Bloomberg News.
The trials will start in September with the country using the National Payment Card System to exchange rubles and cryptocurrencies when testing payments.
In July, Russia’s parliament passed bills legalizing crypto mining and establishing a framework for testing digital tokens for cross-border payments under the central bank’s supervision. President Vladimir Putin signed these bills into law on August 8.
Russian businesses are experimenting with crypto as they encounter increasing difficulties in paying overseas suppliers and receiving payment for exported commodities. These challenges arose after the US expanded its criteria in June for imposing sanctions on foreign banks that collaborate with Russia.
In January 2022, just weeks before Russia’s full-scale invasion of Ukraine, the central bank proposed a blanket ban on using and creating cryptocurrencies. On August 14, Finance Minister Anton Siluanov stated at a forum that authorities are exploring ways to legalize crypto exchanges, according to the state-run Tass news agency.
The central bank created the National Payment Card System in 2014, which now operates Mir cards and Russian instant interbank payment systems. Officials selected this network for the crypto-exchange tests because it already has infrastructure for functions like interbank settlement and clearing. The central bank also fully regulates it.
If the trials are successful, Russia may allow the Moscow Exchange and the St. Petersburg Currency Exchange to establish crypto platforms next year. According to those familiar with the matter, any existing cryptocurrency can be used for the experiment.
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Russia’s turnaround due to sanctions
Russia’s traditional stance on cryptocurrency has been largely cautious and skeptical. The Russian government and central bank have long viewed cryptocurrencies with suspicion, citing concerns about financial stability, money laundering, and the potential for illegal activities.
This wariness dates back to around 2014, when Bitcoin and other digital currencies began gaining international attention. During this period, Russian authorities debated imposing strict regulations or even banning cryptocurrencies outright.
The central bank, in particular, has consistently advocated for limiting the use of digital currencies, culminating in a proposed blanket ban on their use and creation in January 2022, just before Russia’s full-scale invasion of Ukraine.
This sudden change of perspective on cryptocurrency and its uses comes at the behest of the international crackdown due to the Ukraine war.
For instance, most Chinese banks have halted yuan payments to Russia, despite the yuan’s significant role in Russia’s current economy. Meanwhile, Moscow can’t rely on Western currencies like the dollar, as the country lost access to the SWIFT international banking system.
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