- The Central Bank of Russia is working on legislation that will allow the use of cryptocurrencies in international trade settlements.
- The country is expected to build special institutions that will operate crypto mining and crypto transfers to foreign companies.
- Russia is also seeking to reduce the influence of the US dollar in international trade by proposing the use of alternatives such as the Chinese yuan.
According to a recent report, the Central Bank of Russia is working on legislation allowing the use of cryptocurrencies in international trade settlements. This comes at a time when some countries are working to reduce the influence of the U.S. dollar in global trade. Still, others are exploring the potential use of crypto in international trade payments.
Among the countries seeking to use crypto in trade settlements is Russia, whose central bank is reportedly drafting a bill that would allow for the use of digital assets for international payments.
According to an April 18 report by Uralpolit, the Russian financial regulator is currently in consultation with the government on which institutions will be allowed to use crypto.
Russia To Use Cryptocurrencies For International Payments
Speaking at a recent New People party event, the chair of the Central Bank of Russia, Elvira Nabiullina, said that the regulator supports using digital assets by state agencies for settlements with foreign entities. However, it is still against the use of crypto within the country.
According to the proposed law, the Eurasia country is expected to establish particular institutions that will operate crypto mining and cryptocurrency transfers to foreign entities, along with other digital finance operations.
According to the report, these operations will be initially carried out by state-owned companies. Certain private enterprises will also be allowed to carry out the same functions in due course.
Notably, Russia has also been making strides in developing a Central Bank Digital Currency (C.B.D.C.), the digital ruble. The central bank most recently postponed the launch of the pilot of the digital ruble, which was expected to start on April 1, because the related legislation still needed to be prepared.
Russian banks are expected to start testing the digital ruble C.B.D.C. in the country once the regulatory framework is finalized by the end of April or early May.
Russia Seeks Alternatives To The U.S. Dollar
The latest development comes as several countries, including Russia, Saudi Arabia, and China, seek alternative currency to the U.S.U.S. dollar, which currently dominates global trade settlements. Russia is particularly pursuing this route after the United States and other Western countries imposed economic sanctions against it following its invasion of Ukraine in February 2022.
The largest country by area has also been calling for the internationalization of the Chinese Yuan. Russian President Vladimir Putin recently stated that around 66% of the trade between Russia and China is settled using the Yuan and ruble. He further expressed Russia’s support for using the Yuan in settlements between Russia and Asian, African, and Latin American countries.
While Russia is still looking at the possibility of using digital currencies for international trade payments, Iran used crypto to pay for goods imported into the country in August last year. The Head of Iran’s Trade Promotion Organization (T.P.O.) Alireza Peyman-Pak pointed out that cryptocurrencies and smart contracts would be extensively used in foreign trade with nations that favor the initiative.
The shift towards cryptocurrencies and the internationalization of USD alternatives such as the Yuan could have significant implications for the global financial system. Digital currencies could make international transactions faster, cheaper, and more secure.
However, there are concerns about the volatility in crypto prices and the potential for it to be used for illegal activities such as money laundering and terrorism funding. The use of C.B.D.C.s also raises questions about privacy and surveillance.
