Russia Plans to Pilot Bitcoin for International Payments Despite Domestic Ban

The Central Bank of Russia to test bitcoin and other cryptocurrencies in cross-border payments, opening up potential for bypassing Western sanctions.

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The Central Bank of Russia continues to show signs of a change in its stance on the use of bitcoin (BTC) and cryptocurrencies for international payments.

The agency’s chairwoman, Elvira Sakhipzadovna Nabiullina, said this week that they are preparing a regulation that will allow the use of these assets in cross-border negotiations, first “on an experimental basis.”

According to the Russian news agency Tass, the official stressed that the position of prohibiting the use of cryptoassets within Russian territory is maintained.

But she acknowledged that cryptocurrencies can be widely used in international engagements. This, taking into account that these assets make life in global systems.

For that reason, she advanced that they are preparing a draft law focused on a legal and experimental regime, i.e. a pilot plan where virtual assets are used for cross-border payments.

According to Nabiullina, with this project they will create special authorized organizations. These will be in charge of using digital assets in economic activity with foreign entities. Although it is not made clear, these entities will also be engaged in mining Bitcoin and other cryptocurrencies, with the consent of the government.

She clarified that, in addition to cryptocurrencies, they also want to include traditional digital financial assets, such as central bank digital currencies (CBDCs), in the project. “The project is supposed to solve the problem of using digital financial assets for international deals,” he said.

“The Bank of Russia already has what it takes for international payments with digital assets.”
On the same topic, Deputy Chairman of the Central Bank of Russia Alexei Guznov said that the monetary body and the government discuss which organizations linked to the Bitcoin industry will support them with international payments.

“Now a discussion is being held together with the government to make it clear what the field of activity of these organizations will be, which banks they will serve, how much they will be able to interact with representatives engaged in foreign trade activities,” Guznov said.

Within this framework, Nabiullina also said on Wednesday that the Bank of Russia already has the “necessary infrastructure solutions” to develop international payments. She also noted that the institution is ready to adapt these solutions “to the requirements of partners”.

Without explicitly stating it, Nabiullina hinted that the Russian financial system is preparing for the arrival of cryptocurrencies. At least at the level of foreign trade. The above, considering that they want to “remove barriers to expand economic ties with allied countries,” according to the official.

The representative of the Central Bank of Russia has already commented on the use of bitcoin and cryptocurrencies for foreign trade. In May 2022, it softened its stance and suggested that these assets could be used for international payments.

The Russian bank’s announcement comes in a context in which the Eurasian country is looking for ways to bypass Western sanctions. These were applied to them for having militarily invaded Ukraine in February 2022. Since then it has been evaluating the use of cryptocurrencies to provide an outlet for international trade.

With what was said by the president of the Central Bank of Russia, the monetary entity seems to recognize the benefits of these assets for the international trade of the Eurasian country.

It should be remembered that, at the beginning of 2022, the main Russian bank showed a clear opposition to using bitcoin and cryptocurrencies. It was only after Vladimir Putin’s government took a positive view of the ecosystem that a change of perspective was observed in the monetary entity.

The Russian federal government began to raise the idea of using cryptocurrencies for international commitments shortly after the start of the Ukrainian war. This was due to the challenges left by the economic sanctions of the United States and several European countries.

Only in September last year, the country’s Deputy Finance Minister Alexei Moiseev acknowledged that the geopolitical situation forced the Executive to rethink its stance on the cryptocurrency ecosystem for cross-border payments. It was then confirmed that Russia would allow using these assets for international payments, but through supervised wallets.

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