RUSSIA SET TO ADOPT CRYPTOCURRENCIES FOR INTERNATIONAL PAYMENTS STARTING SEPTEMBER

Thu 29 August 2024:

Beginning September 1, Russia will start using cryptocurrencies as an official method for international payments, marking a significant shift in response to Western economic sanctions. Faced with obstacles in traditional payment channels, Russian authorities are now turning to digital currencies to facilitate cross-border transactions.

Before the Ukraine conflict in 2022, the Central Bank of Russia was firmly against the use of cryptocurrencies, advocating for a complete ban. However, after Russia was cut off from the SWIFT payment system, the landscape changed. On August 8, President Vladimir Putin signed a law allowing the experimental use of cryptocurrencies for international payments and Forex transactions. The Central Bank of Russia will oversee this new initiative.

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Unclear Path: How Will Cryptocurrencies Function in Russian Trade?

While the legalization of cryptocurrencies marks a new chapter for Russia, details on their implementation in international trade remain murky. Both the Central Bank governor and the finance minister have indicated their intent to legalize digital currencies, but specifics on their security and operational frameworks are still in development.

Russia’s National Payment Card System, which processes domestic bank card transactions, will be crucial in the transition to using cryptocurrencies for international trade. The Central Bank of Russia, which controls the system, is expected to integrate it with this new payment method. Stablecoins, tied to fiat currencies like the US dollar or Chinese yuan, are anticipated to be central to Russia’s international transactions.

BRICS Support Essential for Russia’s Cryptocurrency Initiative

The success of Russia’s cryptocurrency adoption in global trade hinges on support from BRICS nations. While Brazil, South Africa, and India are reportedly working on related initiatives, their full commitment remains uncertain. A report from Russian Transstroy Bank highlighted potential benefits of using cryptocurrencies in trade, but also warned of challenges such as regulatory restrictions, technical difficulties, and value volatility.

Russia’s digital ruble, which has been in trials since August 2023, is expected to play a significant role in this new cryptocurrency framework. With approximately 30 companies and 11 cities already using the digital ruble, it is being gradually integrated into the economy. President Putin has emphasized the need for widespread adoption of the digital ruble, but experts caution that successful domestic trials are necessary before it can be used in international trade.

As Russia moves forward, it plans to use both cryptocurrencies and the digital ruble in trade with China and other partners, taking inspiration from China’s digital yuan and exploring similar expansion with Belarus.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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