Russian Finance Minister Anton Siluanov stated that Russia is launching a new payment system that is “bound by no restrictions” where digital currencies could be used in cross-border payments. The top official further explained “Two parties come to an agreement, make settlement payments, and no other country could step in and freeze such payments,”.
As reported by Russian news outlet Tass on Monday The Russian Finance Minister Anton Siluanov said that a new payment system will be inaugurated where the utilization of digital currencies in international payments will be completely unconstrained.
The finance minister elaborated “We are launching an alternative system of payments based on modern technologies (digital financial assets, digital currencies).Digital currencies could be used in cross-border payments. This is just at the earliest phase of discussions, but the future lies with the use of the digital ruble, the digital yuan, and other similar currencies.’’
Siluanov emphasized that “This is a system of payments that is bound by no restrictions. Two parties come to an agreement, make settlement payments, and no other country could step in and freeze such payments,”.
Russia’s De Dollarization and Digital Currency Push
Since the Russian ruble is the only form of legal tender in the nation, the Bank of Russia has been dubious about something like cryptocurrency payments. Despite this a significant crypto regulation called “On Digital Financial Assets” was passed by Russia in 2020, making the usage of cryptocurrencies like Bitcoin (BTC) as payment methods illegal.
As per Russian crypto history the concept of using cryptocurrencies as a form of payment first emerged in late 2021. Then, Russian President Vladimir Putin observed that using cryptocurrency for the trading of energy resources like oil and gas was “still premature.”
Following Russia’s invasion of Ukraine, the situation appears to have moved as a result of economic sanctions from the West. Elvira Nabiullina, the governor of the Bank of Russia, later suggested that cryptocurrency can be used for cross-border payments, but only if cryptocurrency doesn’t enter Russia’s domestic financial system. In May, the Minister of Industry and Trade declared that Russia would legalize crypto payments “sooner or later.”
The need for local cryptocurrency services in Russia was emphasized by Moiseev, who pointed out the use of international sites to create crypto wallets by many Russian crypto firms. This is important as far as Russia is concerned and involves central bank-supervised firms that are required to adhere to Know Your Customer and anti-money laundering regulations, the official said.
Moiseev claimed that the planned infrastructure is “too rigid” for the use of cryptocurrencies in cross-border settlements and that the central bank has revised its approach to regulating the business “given that the situation has changed.” He said they have to legalize “somehow.”
Further as a result of economic sanctions imposed by the U.S. and other Western nations following the inception of the Russia-Ukraine war, Russia has escalated its efforts to reduce its reliance on the U.S. dollar. The U.S. and Western allies have taken hold of more than $300 billion in Russian central bank foreign currency assets frozen by sanctions.
The Bank of Russia has been investigating the creation of a digital currency, the digital ruble, as a way to relocate from the U.S. dollar. A report published by the U.S. Congressional Research Service in July 2021 puts forth that the Russian government hastened its de-dollarization efforts in 2014, considering that the launch of a digital ruble would further reduce Russia’s reliance on Western (and dollar-centered) payments infrastructure.