The Russian Federation is considering accepting cryptocurrencies for international payments in response to Western sanctions against the country that were triggered by its large-scale invasion of Ukraine earlier this year.
The Moscow-based Interfax news agency and Reuters reported Friday that Ivan Chebeskov, who heads the Financial Policy Division within the Russian Ministry of Finance, is actively considering bringing crypto payments on board. “The idea of using digital currencies in transactions for international settlements is being actively discussed,” he said.
According to the local newspaper Vedomosti, the Ministry of Finance is studying the possibility of adding the proposal on international payments to an updated version of a law on cryptocurrencies that is still under construction.
Support for the legalization of cryptocurrencies seems to come from all segments of the Russian government. According to Trade Minister Denis Manturov, Moscow plans to legalize cryptocurrency payments “sooner rather than later.” In April, the country’s Ministry of Finance supported legalization in a bill titled “On Digital Currencies.”
That same month, the governor of the Bank of Russia admitted that the central bank was reconsidering its hostile stance towards digital assets. Central bank governor Elvira Nabiullina said that cryptocurrencies are being considered among several measures to mitigate the impact of Western sanctions against the Russian economy.
1/ Russia can’t & won’t use crypto to evade sanctions.
Concerns about crypto’s use for sanctions evasion are totally unfounded. They fundamentally misunderstand:
– how sanctions work
– how crypto markets work
– how Putin is actually trying to mitigate sanctions
— Jake Chervinsky (@jchervinsky) March 1, 2022
1/ Russia cannot and does not want to use cryptocurrencies to evade sanctions.
Concerns about the use of cryptocurrencies to evade sanctions are totally unfounded. Basically they don’t understand
– how sanctions work
– how cryptocurrency markets work
– how Putin is really trying to mitigate sanctions
It is not entirely clear how Russia could use digital assets to circumvent Western sanctions, given that the cryptocurrency market is not large or liquid enough to meet the transaction needs of a sovereign nation. For starters, the US Office of Foreign Assets Control has prohibited any US person from doing business with individuals or entities on its Specially Designated Nationals and Blocked Persons (SDN) List.
The ban on doing business with the Russian SDN exists regardless of existing payment systems. Jake Chervinsky, head of policy at the US-based Blockchain Association, explained:
“There is no reason to think that the existence of cryptocurrencies will convince any of them to deliberately violate sanctions laws, risking fines and jail time.”
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