Russia Turns to Crypto for International Settlements Amid Western Sanctions

Russia is set to initiate the use of crypto for international settlements amid heightened Western economic sanctions imposed on the country. According to a Bloomberg report that cited two people who know the matter, an experimental regime has been implemented, allowing cryptocurrency exchange trials starting September 1.

Experimental Regime

This trial will include testing conversion between Russian rubles and cryptocurrencies through the National Payment Card System. This payment system was chosen for the crypto exchange tests due to its pre-existing features, such as interbank settlement and clearing. The Central Bank of Russia fully regulates the network and operates Mir cards and Russian instant interbank payment systems.

The report added that if the trial succeeds, Russia may permit the Moscow Exchange and the St. Petersburg Currency Exchange to establish crypto platforms next year. It said that existing cryptocurrencies can be used for this experiment.

The latest move comes a few weeks after President Vladimir Putin signed a bill legalizing crypto mining and allowing cryptocurrencies for cross-border payments under the supervision of the country’s central bank.

The initiative is part of a broader strategy to circumvent Western economic sanctions and reduce the dependence on the U.S. dollar for international settlements. These sanctions, related to Russia’s invasion of Ukraine in February 2022, have made it difficult for businesses in the country to settle foreign suppliers and receive settlements for exported commodities in return. The sanctions have also forced several nations to distance themselves from Russia, with most Chinese banks blocking yuan payments to Russia.

Crypto for International Settlements

Known for its anti-crypto policies, Russia’s shift towards crypto as a response to Western sanctions highlights the importance of asset class in the global financial landscape.

While reflecting Russia’s strategic move to circumvent international sanctions and reduce its dependency on the U.S. dollar, this initiative could set a precedent for other countries facing similar economic pressures.