Due to Sanctions, Russia to Test Crypto Settlements for Military-Related Imports The Russian government has established a working group that will test the settlement of cryptocurrencies in international trade – specifically those including dual-purpose goods, which also have military use. The project is part of an experimental legal regime (EPR) after the adoption of a law that allowed the use of cryptocurrencies for international settlements, even though a complete regulatory framework is yet to be worked out.
Russia’s New Attempt to Address the Payment Problem with regard to Dual-Use Goods
To this end, the report said a new focus group would be established to resolve the financial problems that Russian importers have to deal with while working with dual-use goods. Such goods have both civilian and military use and, per rule, are under tight international restrictions, which makes payments and trade very sensitive. The group will involve the key stakeholders from the CCI, ARPE-the Association of Developers and Producers of Electronics-and several banks.
What the government is trying to do, in effect, is to find ways of using cryptocurrency effectively in carrying out cross-border transactions of sensitive goods, especially with countries like China. The group has focused mainly on larger importers with high turnovers from a business point of view, although scaling up participation is expected, no timeline has been fixed as yet.
From Yuan to Tether: How Russia is Using Cryptocurrency to Bypass Sanctions
All this change in Russia’s attitude toward cryptocurrency was brought about by the increasing difficulty of using traditional means of payment. The sanctions imposed by the U.S. and its allies, most especially the exclusion of them banks from the SWIFT payment system, have severely restricted Russia’s capability to settle international trade deals.
Following China’s ban on the export of civilian drones on September 1, a move that further complicated Russian imports, Them has increased its reliance on digital currencies to facilitate foreign trade. Recent reports indicate that some of Russia’s biggest unsanctioned metal producers have started using Tether for cross-border transactions with Chinese partners. It has allowed them to avoid not only U.S. dollar settlements but even yuan-denominated ones, as some of those settlements have also been rejected by banks in China, due to fear of a possible impact from secondary sanctions.
It is reported that around 80% of the yuan-denominated payments flow back to Russia, which makes cryptocurrency more viable for some of those sectors.
Regulatory Framework in the Making: Select Institutions Only
Though complete regulation is yet awaited, Russia’s cryptocurrency law, in effect since September 1, does permit the use of digital currencies in international settlements. Chairman of State Duma Financial Market Committee Anatoly Aksakov said that already the Central Bank, along with the Ministry of Finance, is working on bylaws necessary to define the regulations of cross-border crypto payments.
The regulations, expected no later than November, will limit participation in the first instance to some financial institutions only, in order to protect the market from bad actors involved in arms or drug trades. Aksakov emphasized that using cryptocurrency will be allowed only in foreign trade and won’t be permitted as a means of completing domestic transactions. Authorities want the process tightly regulated to prevent upheaval in the economy or any other type of misuse.
Expanding the Use of Cryptocurrency in Russian Trade
Although anybody with even half a brain will tell you that without complete regulatory oversight, it’s been reported that already Russian companies have started settling foreign trade deals in cryptocurrency and doing billions of dollars worth of transactions. The results of this focus group are likely to provide the basis for how quickly Russia will scale up its use of digital currencies across international trade.
The new initiative comes as Russia still grapples with the economic consequences of sanctions imposed following its invasion of Ukraine. By allowing cryptocurrency settlements for military-related imports and dual-use goods, Russia aims to circumvent traditional financial systems in a bid to secure critical imports needed for both civilian and military purposes.
