Sanctions-hit Russia passes bill allowing global payments with cryptocurrencies
As reported by the press, Russian lawmakers approved a new law on Tuesday that allows the use of cryptocurrency for international payments. With the war in Ukraine, the country has faced great economic pressure caused by Western sanctions.
The State Duma, the lower house of the Russian parliament, has given the initial green light to new legislation that will allow companies to use cryptocurrencies for international trade.
We are making a historic decision in the financial sphere.
State Duma head Anatoly Aksakov told lawmakers, according to Reuters.
According to Mati Greenspan, CEO of crypto market research firm Quantum Economics, Russia's embrace of cryptocurrency makes sense, as transactions "cannot be censored or blocked by any government or bank."
Previously, Russia would not have wanted to allow this kind of transactional freedom to its citizens, but we are now at a point where Bitcoin is used so frequently in everyday commerce that the opportunity cost of them not allowing it is simply too high.
Given this opportunity cost, in addition to approving legislation that allows Russian companies to make international transactions using cryptocurrencies, the country's central bank will also be allowed to move money abroad using private digital currencies.
Russian central bank governor Elvira Nabiullina said that cryptocurrency-based payments would start taking place before the end of 2024: "We are already discussing the terms with ministries and departments, with companies, and we expect the first such payments to take place before the end of this year."
Recall that in January 2022, the Russian central bank proposed banning the use of crypto for transactions, citing threats to financial stability, the well-being of citizens and the sovereignty of monetary policy.
Russia has been the target of sanctions imposed by the United States, the European Union and Great Britain since the invasion of Ukraine in February 2022. The governments have continued to pressure the country, targeting President Vladimir Putin, Russia's financial sector and also oligarchs, as recalled by CNBC.
Russia is exploring a digital currency
Like other governments, Russia is exploring the implementation of a digital version of the ruble. The central bank’s governor said the bank would seek to move from a pilot phase to a mass implementation of the digital ruble from July 2025, according to Russia’s Interfax news agency.
Unlike cryptocurrencies, which have no central authority governing them, Central Bank Digital Currency ( CBDCs ) are issued directly by a government and are designed to replicate fiat currencies in the form of a digital token.