Illustrative image of two commemorative Bitcoins in front of a Russian flag displayed on a computer screen.
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Russia is considering legalizing the use of cryptocurrencies for international payments as the country faces continued financial pressure from Western sanctions.
Elvira Nabiullina, the governor of the Russian Central Bank, said on Tuesday that the State Duma, Russia’s lower house of parliament, will consider a law on Tuesday that would allow international payments through cryptocurrencies.
According to the state-owned news agency RIA Novosti, Nabiullina said in a speech at the Russian Federation Council, the upper house of the Russian parliament, that “Today, the State Duma is considering the enactment of a law that would allow settlements in cryptocurrencies within the framework of the experimental system. “.
The Duma is expected to approve the law on Tuesday, Reuters reported.
Russia’s central bank itself is looking to use cryptocurrencies to move funds across borders, with its governor stating that cryptocurrency-based payments will be available by the end of 2024.
“We are already discussing the terms of the trial with ministries and businesses and we expect the first payments to be made before the end of the year,” she said.
When contacted by CNBC, the Russian Embassy in London did not immediately comment on the country’s plans to pass pro-cryptocurrency legislation.
The central bank’s commitment to using cryptocurrencies as a method of cross-border payments marks a reversal from the regulator’s previous stance on the technology.
In January 2022, the Central Bank of Russia proposed a ban on cryptocurrency transactions and the mining of digital currencies, citing threats to financial stability, citizen well-being and monetary policy sovereignty.
under pressure from sanctions
Rising tensions between Russia and the United States and its allies have led Russia to impose numerous sanctions on individuals and entities in retaliation for its attacks on Ukraine.
After Russia invaded Ukraine in February 2022, the United States, the European Union and the United Kingdom imposed sanctions on Russia. They continue to increase pressure on the country, targeting President Vladimir Putin, the Russian financial sector and numerous oligarchs.
In addition, Russia is also exploring the implementation of a digital version of the ruble.
Central bank digital currencies (CBDCs) are not the same as cryptocurrencies. unlike Bitcoin Like other cryptocurrencies that are not managed by a central authority, CBDC is issued directly by governments and is designed to replicate fiat currency in the form of digital tokens.
Central bank governor Nabiullina said on Tuesday that regulators will seek to move from a pilot phase to large-scale implementation of the digital ruble from July 2025, according to Russian news agency Interfax.
Can cryptocurrencies help countries evade sanctions?
Other sanctioned countries often try to circumvent such financial restrictions through the use of cryptocurrencies.
North Korea has repeatedly been accused of raising millions of dollars through cryptocurrencies to help fund various state projects and evade foreign sanctions.
North Korean state-backed hacker group Lazarus is behind a massive heist Ronin Network — A blockchain that supports the popular non-fungible token (NFT) game Axie Infinity. Blockchain analysis companies Elliptic and Chainaanalysis have previously stated that the hack resulted in cybercriminals stealing more than $600 million worth of digital tokens.
On the other hand, cryptocurrency proponents also claim that digital assets are useful tools in combating illegal activities. This is because the network that underpins them (called a blockchain) is public and displays a cryptographically secure and unchangeable history of transactions.
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