Russia is preparing to allow international crypto payments, but those involved in the industry are skeptical that this will allow the country to bypass sanctions. Similarly, the United States has recently passed new legislation in Congress targeting the use of cryptocurrencies to overcome financial restrictions imposed by the West.
Russian crypto experts say sanctions on cryptocurrencies are a ‘great illusion’.
This week, Russian authorities announced that they have begun developing a mechanism for cross-border settlements with crypto assets in an effort to reduce the burden of sanctions on the Russian economy and business. The Ministry of Finance has agreed with the Central Bank of Russia on a bill to legalize such transactions.
Moscow is now rushing to pass laws on imports and exports of digital currencies, which have been restricted by Western sanctions over its invasion of Ukraine, the issuance and transfer of digital currencies. Meanwhile, the US Congress House of Representatives has approved a new bill containing measures to ban cryptocurrencies.
Against this background, experts with knowledge of the industry shared their opinion with the Russian media about how realistic it is to bypass the sanctions with the help of cryptocurrencies. The Russian business news portal RBC Crypto page compiled an article, the title of which begins with the phrase “great nightmare”.
According to Maria Stankevich, director of development at the digital asset exchange Exmo (Exmo.com), the fact that the crypto payment system is under the ban is actually a big illusion. She recalled that many state-owned companies discussed this option in 2014 amid sanctions imposed after Russia’s annexation of Crimea.
Russia is not the first to turn to cryptocurrency for payments.
Mikhail Zuzhalov, a senior lawyer at the Tomashevskaya & Partners law firm, agreed with the crypto executive that the idea of overcoming financial obstacles with the help of crypto is not new. In the year In 2018, Russian authorities considered allowing international companies established in the country’s special administrative regions to use digital coins in settlements with partners, but the idea was rejected by regulators who had a very negative view at the time.
Regulatory pressure is often on institutional players such as cryptocurrency exchanges, peer-to-peer platforms, and issuers of digital and tokenized assets, Zuzzhalov noted. He also pointed out that although the distribution of cryptocurrencies is not self-regulated, it is easy to go after legally licensed companies.
If such market participants are subject to unfriendly judgments, they are obliged to comply with the sanctions. And if they are located in independent countries, they can be imposed secondary sanctions, as recently seen with Turkish banks.
Two of the five Turkish lenders that work with Russian Mir cards have decided to stop their activities with the payment system, which is widely used by Russian tourists visiting the country. The move follows clear signs earlier this month that Washington may impose sanctions on countries that do business with Mir. According to local media in Turkey, a new Turkish-Russian payment system is being developed.
It is almost impossible to hide large-scale transactions, Maria Stankevich believes, and anyone who wants to work with Russia using cryptocurrencies will still be banned. The number of people who choose to continue this will decrease, she is sure. Tracking crypto transactions is easier than bank transfers, Stankiewicz added. “It’s just a matter of accepting that relations with the West will be limited as it stands,” she concluded.
Do you think Russia can ease the sanctions by employing cryptocurrencies for cross-border payments? Share your thoughts on the topic in the comment section below.
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