Amid Sanctions, Russia Weighs Crypto For International Payments: Report

The Russian Federation is reportedly considering accepting cryptocurrencies for international payments in response to Western sanctions a...



The Russian Federation is reportedly considering accepting cryptocurrencies for international payments in response to Western sanctions against the country that were prompted 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 in the Russian Ministry of Finance, is actively considering the possibility of integrating crypto payments. “The idea of ​​using digital currencies in transactions for international settlements is being actively discussed,” he said.

According to local newspaper Vedomosti, the Ministry of Finance is considering adding the proposal on international payments to an updated version of a crypto law that is still under construction.

Support for legalizing cryptocurrencies seems to come from all segments of the Russian government. According to Trade Minister Denis Manturov, Moscow plans to legalize crypto payments “sooner rather than later.” In April, the country’s finance ministry backed legalization in a bill titled “On Digital Currency.”

Related: Updated Russian Crypto Mining Bill Reduces Tax Amnesty for Bitcoin Miners

In the 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 crypto is being considered among several measures aimed at mitigating the impact of Western sanctions against the Russian economy.

It is not entirely clear how Russia could use digital assets to circumvent Western sanctions given that the crypto market is not big enough or liquid enough to meet the transaction needs of a sovereign nation. For starters, the U.S. Office of Foreign Assets Control has prohibited any U.S. person from doing business with people or entities on its Specially Designated Nationals and Blocked Persons (SDN) list.

The ban on doing business with Russian SDNs exists regardless of the payment systems in place. Jake Chervinsky, head of policy at the US-based Blockchain Association, Explain:

“There is no reason to think that the existence of crypto will convince any of them to deliberately violate penalty laws, risking fines and jail time.