Russian lawmakers passed a bill on Tuesday permitting businesses to use cryptocurrencies in international trade, aiming to circumvent Western sanctions imposed after Russia’s invasion of Ukraine. The law is expected to come into effect in September, with Russian central bank Governor Elvira Nabiullina, a supporter of the law, stating that the first cryptocurrency transactions will occur before the end of the year.
Russia has encountered significant delays in international payments with major trading partners like China, India, and the UAE, as banks in these countries, under Western regulatory pressure, have become more cautious.
“We are making a historic financial decision,” Anatoly Aksakov, head of the Duma lower house of parliament, told lawmakers. The new law mandates the central bank to establish an “experimental” infrastructure for cryptocurrency payments, with details yet to be announced.
The law, part of a broader package, also includes regulations on cryptocurrency mining and the circulation of other digital assets. However, it does not lift the existing ban on cryptocurrency payments within Russia.
The central bank noted that payment delays have become a significant challenge for the Russian economy, causing an 8% decline in Russian imports in the second quarter of 2024. Despite efforts to switch to trade partners’ currencies and develop an alternative payment system within the BRICS group, many payments still occur in dollars and euros through the SWIFT system.
This exposes banks in countries trading with Russia to the risk of secondary sanctions, compelling them to tighten compliance procedures. “The risks of secondary sanctions have increased, complicating payments for imports and affecting a wide range of goods,” Nabiullina stated, emphasising that payment delays have led to longer supply chains and rising costs.
