Will cryptocurrencies soon become a means of payment in Russia?

According to media reports, Russia is preparing to legalize cryptocurrencies in international payment transactions in order to enable local companies to import important goods.

Deputy minister calls crypto legalization “essential”
• Blockchain technology for processing international payments
• Introduction of the Russian central bank currency planned for 2023

As recently as July 26, a law came into force in Russia banning the payment of goods and services using cybercurrencies, or NFTs, within the country. However, owning cryptocurrencies or NFTs themselves has not been banned.

Trade exclusively with pro-Russian states

Now the Central Bank and Ministry of Finance are said to have agreed to legalize cryptocurrencies in international payment transactions. “Under the current conditions, it is impossible to do without cross-border payments in cryptocurrency,” Deputy Finance Minister Aleksey Moiseev told Russia-24, according to BTC-ECHO.

Since there is still no legal basis that allows trading in cryptocurrencies, it must first be legalized and regulated at the same time, Moiseev said. The deputy finance minister cited the regulation and control of cyber transactions by the Russian central bank as justification for the need for legalization. Legalization prevents the opening of crypto wallets outside of Russia, which would thus evade Russian anti-money laundering laws.

With Russia remaining locked out of the international payment system SWIFT due to the Ukraine war, the legalization of Bitcoin, Ethereum, and Co. could be an opportunity for international trade to process payment transactions with pro-Russian states. The Ministry of Finance is calling for legalizing crypto transactions for Russian companies, as it allows importing essential products and ensures the financial survival of the companies. According to a report by the Russian news agency TASS, Russia now wants to set up a platform that will enable payment transactions with “friendly countries”.

So far, this had failed at the Russian central bank and above all at its governor Elvira Nabiullina, who, according to cryptonews, is planning to introduce a digital central bank currency as early as 2023. The CBDC can then be used in both B2B and B2C payments.

UK: Sanctions include cryptocurrencies

Meanwhile, in early September, Britain reiterated that it would take action against violators by Russian citizens or companies who are subject to international sanctions. The definitions of “funds” and “economic resources” are broad, according to the “Notes on Financial Transactions”. “Crypto assets are considered to be covered by these definitions and therefore fall within the limits of financial sanctions,” according to the UK Treasury.

The special department of the British Treasury Department OFSI has already in August asked to report all suspicious transactions that might have been used to circumvent sanctions. Crypto exchanges are also required to freeze suspect crypto assets. However, there is still no international law that could force crypto exchanges to freeze wallets that are affected by sanctions.